Bilfinger Se · XETR:GBF
Bilfinger — Investor Day (February 2023)
71 slides from Bilfinger's investor day presentation, Feb 14, 2023
Slide 1: Capital Markets Day 2023 Strategy & Execution
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Strategy & Execution Dr. Thomas Schulz | CEO February 14, 2023
Slide 2: Strategy
Strategy Sustainable, profitable growth through Re-Positioning and driving Operational Excellence Efficiency year No. 1 for customers in enhancing Bilfinger & Sustain- 2027 efficiency and sustainability Future ability 2026 Positioning 2025 2024 2023 6 12 18 24 Bilfinger Today months Efficiency Progr
Slide 3: Financial targets
Financial targets Execution of this strategy allows us to set new mid-term targets 2024 2025-2027 Organic Growth 4-5% CAGR Increasing EBITA ≥5% 6-7% margin Improving Cash >70% >80% Conversion1 1 Cash Conversion: FCF / EBITA Bilfinger SE | Capital Markets Day 2023 | February 14, 2023 page 3
Slide 4: Market and self-propelled organic growth
Market and self-propelled organic growth: Europe, Middle East, North America Our revenue growth will exceed market growth, M&A comes on top Overall growth projection M&A CAGR in 2-3% addressable market Market expansion 4-5% CAGR Offering ~2% Geography 2022 Market growth Self-propelled growth 202
Slide 5: Agenda
Agenda Strategy & Execution Thomas Schulz, Group Chief Executive Officer Strategy & Execution Matti Jäkel, Group Chief Financial Officer Segment Engineering & Maintenance Europe Jürgen Liedl, Executive President, E&M Europe Segment Engineering & Maintenance International Christian Rugland, Executive
Slide 6: The New Normal
The New Normal Our customers face significant short- and long-term challenges in terms of efficiency and sustainability Industry Need for 4.0 Volatility education Energy costs Social disputes De- Digitalization globali- zation Over- Climate Over- population change regulation Inflation Labor Politica
Slide 7: Bilfinger's world
Bilfinger’s world In a changing world, our customers require expertise and resources to meet their targets U.S. Inflation Reduction Act: Reduce heating oil consumption: $ 369 bn for clean energy 30% less emission Energy efficiency: Invests >€ 5 bn € 500 m invested until 2030 in green technologies SB
Slide 8: Our market: Addressable market in Europe, Middle East, North America
Our market: Addressable market in Europe, Middle East, North America Industry trends of efficiency and sustainability ensure continued positive demand in all markets Energy Chemicals & Pharma & Oil & Gas Petrochemicals Biopharma Addressable market 61 bn 34 bn 20 bn 22 bn 30% 10% 20% Bilfinger1 20% C
Slide 9: Green Technologie
Green Technologie We are a driving force in the industry’s transformation to greater efficiency and sustainability in existing plants and new technologies Growth niches Market Bilfinger examples 5x increase in announced clean hydrogen Bilfinger supports Gasunie in the production capacity for 2030 si
Slide 10: Our market: Horizontal
Our market: Horizontal With the extension of the our value chain towards a solution partner, we utilize our core competences over all process industries equally Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Growth of Bilfinger’s business is similar Frame
Slide 11: Bilfinger offering
Bilfinger offering We are excellently positioned to establish ourselves as the No. 1 in our target markets Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Regional footprint Key characteristics 3 Segments About 30,000 employees Our business is organized
Slide 12: Market conditions
Market conditions Customers increasingly require sustainability solutions from their solution partner – this new positioning in the market will raise the entry barriers for the competition and increase our profitability Development of customer requirements Market segmentation High entry barriers & p
Slide 13: Bilfinger towards solution partner
Bilfinger towards solution partner By moving from single trade offers to a solutions partner, we improve our profitability and increase the sustainability impact for our customers Our offering Relative Margin Sustainability effects of our clients Energy reduction e.g. Scaffolding services instead Si
Slide 14: Business model
Business model The business model is based on improving efficiency and sustainability both for customers and for ourselves, generating added value Business Parameters to drive Vision model business model Our business model No. 1 for customers in Addressable market enhancing efficiency is based on en
Slide 15: Strategy levers
Strategy levers Three strong levers to achieve our goals Functional Organization 1. Efficiency Program Competence Development Procurement Standardization & Bundling 2. Operational Excellence De-Risking Digitalization & Innovation Market Expansion 3. Positioning Sustainability Partner
Slide 16: 1. Efficiency Program
Strategic lever I The Efficiency Program provides for savings of €55 million p.a., and is an immediate contribution to our strategic goals 1. Efficiency Program Functional Built for organizational efficiency Lean management and administrative structures Profitability 12 months Organization Tra
Slide 17: Competence Development
Competence Development Deep dive We will invest more than 0.5 percent p.a. of revenue into education and training Training on Efficiency & Sustainability, HSEQ and Digitalization & Innovation Standardized and certified trainings in training centers To offer best-in class services for our customers T
Slide 18: 2. Operational Excellence
Strategic lever II We will achieve our goal of operational excellence through product standardization and bundling, de- risking of our business as well as increased digitalization and innovation 2. Operational Excellence Standardization Contract selection and execution Standardized execution and
Slide 19: 3. Positioning
Strategic lever III Expansion of the full line offering to all existing geographies and into adjacent markets as a solution partner for sustainability drives self-propelled growth 3. Positioning Full line offering in all existing geographies – core expansion Market Expanding into other geographi
Slide 20: Bilfinger commits to SBTi
Bilfinger commits to SBTi We target for carbon neutrality by 2030 and Net Zero by 2050 Deep dive Our business with direct and indirect environmental impact has grown by 50% year-on-year Key milestones of the road to net zero Bilfinger business aligned with the Science Based Targets initiative classi
Slide 21: Capital Markets Day 2023 Strategy & Execution (CFO)
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Strategy & Execution Matti Jäkel | CFO February 14, 2023
Slide 22: Financial targets
Financial targets Execution of this strategy allows us to set new mid-term targets 2024 2025-2027 Organic Growth 4-5% CAGR Increasing EBITA ≥5% 6-7% margin Improving Cash >70% >80% Conversion1 1. Cash Conversion: FCF / EBITA Bilfinger SE | Capital Markets Day 2023 | February 14, 2023 page 22
Slide 23: Sustainable profitable organic growth
Sustainable profitable organic growth Key Performance Indicators to measure our success Revenue [€ m] EBITA [€ m] | Margin [%] 6-7% 4-5% CAGR ≥ 5% 3.7% 3.2% 2.4% 4,327 4,312 0.6% 3,461 3,737 137 140 104 20 2019 2020 2021 2022 2024 2025- 2019 2020 2021 2022 2024 2025- 2027 adjusted 2027 Organic growt
Slide 24: Strategic levers for sustainable profitable organic growth
Strategic levers for sustainable profitable organic growth These three levers will deliver up to 4%points EBITA margin improvement in the next years 6-7% EBITA margin [%] 1% 3. Positioning ≥5% 1% 1-2% 2. Operational Excellence 1% 1% 1. Efficiency Program 3% 3% 3% 2022 2024 2025-2027 Bilfinger SE | C
Slide 25: Strategic lever: Efficiency Program
Strategic lever: Efficiency Program Net Savings will provide 1%point of SG&A ratio improvement from 2024 onwards 1. Efficiency Program SG&A [%] 8.4% Standardize core functions 8.0% 7.6% Functional 7.1% Shift transactional tasks to shared services Organization 6% <6% Optimize IT Deep dive next
Slide 26: Efficiency Program: Organizational transition
Efficiency Program: Organizational transition Deep dive Includes the adoption of a functional organizational structure and leaner administration ... 2023 2024 ... Corporate Functions Products & Innovation HR / HSE Procurement LE LE LE LE LE Finance Shared Services Shared Services Bilfinger SE | Capi
Slide 27: Strategic lever: Operational Excellence
Strategic lever: Operational Excellence As one result, frame and service contract business will account for 80% of total revenue in the future 2. Operational Excellence Frame & service contracts Projects De-risking Rebalance from 65/35 to 80/20 Frame contracts with average contract tenure of 3-1
Slide 28: Contract Selection & Execution
Contract Selection & Execution Deep dive High discipline will lead to higher profitability Contract Selection and Execution Opportunity selection EBITA margin [%] 1 – along defined risk criteria 6-7% 1% ≥5% Tender and Negotiation 1-2% 2 – remain steadfast within risk corridor 1% 1% 1% Delivery capab
Slide 29: Strategic lever: Positioning
Strategic lever: Positioning Economies of scale and sales mix will support EBITA margin improvement 3. Positioning Market Scale effects: additional profitable EBITA margin [%] revenue supported by existing 6-7% Expansion organization 1% ≥5% Change in product mix: higher 1-2% share of planning an
Slide 30: Profitability to drive cash generation
Profitability to drive cash generation Increasing cash conversion to consistently more than 80% EBITA [€ m] | Margin [%] Free Cash Flow [€ m] | Cash Conversion [%] 6-7% ≥ 5% 3.7% 3.2% 2.4% >80% 0.6% >70% 137 140 136 104 93 115 57 20 2019 2020 2021 2022 2024 2025- 2019 2020 2021 2022 2024 2025- adjus
Slide 31: Working Capital improvements
Working Capital improvements A strong cash focus throughout the organization De-risking Revenue [€ m] | Average NTA/Revenue [%] contract Enforces faster cash generation 14.5% 14.1% 13.4% portfolio 12.0% 11.5% 10-11% Standardization of offering & 4,372 4,312 Bundling of services 3,737 3,461 Optim
Slide 32: Capital Allocation to drive Total Shareholder Return
Capital Allocation to drive Total Shareholder Return A dividend of € 1.30 will be proposed to next Annual General Meeting Revenue Growth EBITA Improvements Cash Conversion Dividend: 40-60% of adjusted net profit and continuous growth Organic growth M&A Share buyback Adhere to financial policy and ac
Slide 33: Financial targets
Financial targets Execution of this strategy allows us to set new mid-term targets 2024 2025-2027 Organic Growth 4-5% CAGR Increasing EBITA ≥5% 6-7% margin Improving Cash >70% >80% Conversion1 1. Cash Conversion: FCF / EBITA Bilfinger SE | Capital Markets Day 2023 | February 14, 2023 page 33
Slide 34: Strategy
Strategy Sustainable, profitable growth through Re-Positioning and driving Operational Excellence Efficiency year No. 1 for customers in enhancing Bilfinger & Sustain- 2027 efficiency and sustainability Future ability 2026 Positioning 2025 2024 2023 6 12 18 24 Bilfinger Today months Efficiency Progr
Slide 35: Capital Markets Day 2023 Segment E&M Europe
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Segment E&M Europe Jürgen Liedl | Executive President February 14, 2023
Slide 36: E&M Europe: Financial targets
E&M Europe: Financial targets Mid-term CAGR Mid-term profitability target ~4% 7-8% 0.5-1% 0.5-1% ~2% ~1% 5.0% ~2% Market growth Self propelled Target EBITA adj. Efficiency Operational Positioning Target EBITA growth growth margin 2022 Program Excellence margin Bilfinger SE | Capital Markets Day 2023
Slide 37: E&M Europe: Market
E&M Europe: Market The New De- Climate Labor Normal Inflation Digitalization globalization change shortage Our world Wage inflation between 4 and 12% but All German refineries fully independent from Russian Oil with expected peak end 2022 & Gas since beginning of 2023 Port of Rotterdam to reduce CO2
Slide 38: E&M Europe today
E&M Europe today Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Others Projects 25% 20% Chemical & Pharma & 40% Petrochemical Biopharma 5% 10% Energy 75% Frame & 25% service contracts Oil & Gas Revenue [€ m] EBITA adj. [€ m] EBITA ad
Slide 39: E&M Europe in the future
E&M Europe in the future Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Projects Others 10% 15% Pharma & Chemical & Biopharma 10% 40% Petrochemical 20% 90% Energy 15% Frame & service contracts Oil & Gas Bundle services to solutions a
Slide 40: E&M Europe: Strategic levers
E&M Europe: Strategic levers 1. Efficiency Program 2. Operational Excellence 3. Positioning Competence Develop skills required for bundled services Growth ongoing Development Rollout lean management trainings to local leadership Profitability Standardization Develop standardized execution from
Slide 41: E&M Europe: Example of Sustainability Partner
E&M Europe: Example of Sustainability Partner Innovative product: CO2 Masterplanning Client Case Client Case CO2 Masterplanning Electrification of boilers The challenge Reduce CO2 emissions at existing sites with limited Transform power supply of boilers in process industries invest from conventiona
Slide 42: E&M Europe: Example of Standardization & Bundling
E&M Europe: Example of Standardization & Bundling Access Services: Level-one scaffold Example Access Services – Bilfinger Contribution Level-one scaffold 1. Measure performance across Reduced current different sites ~70% average time from 45 Less time min to 13 min per 2. Compare ways of assembly
Slide 43: E&M Europe: Example of Standardization & Bundling
E&M Europe: Example of Standardization & Bundling Combine single trade service into competitive offerings Customer Contract Bilfinger Contribution Shell Moerdijk 1969: Insulation, scaffolding Compared to -60% conventional 2012: + Painting cost approach with 2020: + Engineering reduction scaffoldin
Slide 44: Capital Markets Day 2023 Segment E&M International
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Segment E&M International Christian Rugland | Executive President February 14, 2023
Slide 45: E&M International: Financial targets
E&M International: Financial targets Mid-term CAGR Mid-term profitability target ~6% 5-6% ~3% ~4% ~3% 1-2% ~1% Market growth Self propelled Total growth growth -0.7% EBITA adj. Efficiency Operational Positioning Target EBITA margin 2022 Program Excellence margin Bilfinger SE | Capital Markets Day 20
Slide 46: E&M International: Market
E&M International: Market The New Political Normal Inflation Overregulation Volatility Climate change conflicts Our world Inflation Reduction Act: Announced to reach NetZero by 2050 $ 369 bn for clean energy Plans a 170 km long Announced ambition to become central trading CO2 free city “The Line” hu
Slide 47: E&M International today
E&M International today Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Chemicals & Petrochemicals 20% Projects 40% 10% Energy 60% Frame & 60% service Others 10% contracts Oil & Gas Revenue [€ m] EBITA adj. [€ m] EBITA adj. margin [%]
Slide 48: E&M International in the future
E&M International in the future Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Projects Others Chemicals & 5% Petrochemicals 10% 25% Oil & Gas 30% 90% 40% Frame & service Energy contracts Business transformation into frame & service
Slide 49: E&M International: Strategic levers I
E&M International: Strategic levers I 1. Efficiency Program 2. Operational Excellence 3. Positioning Functional Rightsize with service centers and offshore product centers Attract and retain talents Profitability 12 months Organization Continuous improvement in efficiency and quality Competenc
Slide 50: E&M International: Strategic levers II
E&M International: Strategic levers II 1. Efficiency Program 2. Operational Excellence 3. Positioning Discontinue large construction projects De-risking Ensure modification projects’ execution through Profitability ongoing the Bilfinger Project Concept Market Expand Bilfinger portfolio (other
Slide 51: E&M International: Example of Sustainability Partner
E&M International: Example of Sustainability Partner Chimney Upgrade in Kuwait Customer Project Sustainability Effects Upgrading turbines and generators Reduce NOx & SOx emission Eliminate flue gas leak -76% NOx/SOx emission emission reduction Bilfinger Solutions Standardization and bundli
Slide 52: E&M International: Example of Multitrade business
E&M International: Example of Multitrade business Efficiency improvement program Customer Project Bilfinger Contribution Streamline plant and identify savings opportunities 80 years partnership Integrated team with Lack of network platform and idea 100% customer sharing on-time Standard pr
Slide 53: Capital Markets Day 2023 Segment Technologies
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Segment Technologies Thorsten Hoppe| Executive President February 14, 2023
Slide 54: Technologies: Financial targets
Technologies: Financial targets Mid-term growth per year Mid-term profitability target ~6% 6-7% ~1% ~3% 1-2% ~3% ~1% 3.0% Market growth Self propelled Target EBITA adj. Efficiency Operational Positioning Target EBITA growth growth margin 2022 Program Excellence margin Bilfinger SE | Capital Markets
Slide 55: Technologies: Market
Technologies: Market The New Normal Energy costs Climate change De-globalization Digitalization Our world Enhancing human life Invests >€ 5 bn in green technologies We’re working 24/7 to help us reach Powering the battery age Net Zero carbon emissions Growth Market growth Self-propelled growth CAGR
Slide 56: Technologies today
Technologies today Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Frame & service contracts Others Oil & Gas Pharma 5% & Bio- Chemicals & 10% pharma Petro- 5% 35% 15% chemicals 95% 35% Projects Energy Revenue [€ m] EBITA adj. [€ m] E
Slide 57: Technologies in the future
Technologies in the future Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Horizontals Verticals Others Pharma 5% & Bio- pharma 35% 60% 100% Energy Projects Focus on green Energy, Pharma & Biopharma as well as supporting long-term clients with their invest
Slide 58: Technologies: Strategic levers I
Technologies: Strategic levers I 1. Efficiency Program 2. Operational Excellence 3. Positioning Functional Organization: focus on business development and project management Profitability 1 year Organization Administration through shared services and regions Competence Project Manager developm
Slide 59: Technologies: Strategic levers II
Technologies: Strategic levers II 1. Efficiency Program 2. Operational Excellence 3. Positioning Digitalization & Make piping smart through automation Partnering with expert groups Growth ongoing Innovation Smart and sustainable fabrication Profitability Market Supporting long-term clients w
Slide 60: Technologies: Example for Sustainability Partner
Technologies: Example for Sustainability Partner Supporting the process industries to reduce CO2 footprint Customer Project Bilfinger Contribution Move cheese production from animal based milk to vegan 25% reduced Using standardized Be the first company worldwide engineering skid engineering p
Slide 61: Technologies: Example for Energy Transition
Technologies: Example for Energy Transition Bio-Diesel from wood feed stock instead of crude oil based Diesel production Customer Project Bilfinger Contribution Demo Plant: production of 30 barrels of Bio-Diesel per day from wood feed stock to substitute crude oil Diesel 18% By applying Bilfinge
Slide 62: Technologies: Example for Energy Transition
Technologies: Example for Energy Transition H2 Production for RWE in Eemshaven Customer Project Bilfinger Contribution 50 MW hydrogen plant from green power 30% fabrication With > 5 % saving in H2 to be injected into the hydrogen lead time heating energy pipeline reduction Sustainability Effec
Slide 63: Capital Markets Day 2023 Wrap Up
BILFINGER SE - LEADING IN INDUSTRIAL SERVICES - Capital Markets Day 2023 Wrap Up Dr. Thomas Schulz | CEO Matti Jäkel | CFO February 14, 2023
Slide 64: Strategy
Strategy Efficiency year No. 1 for customers in enhancing Bilfinger & Sustain- 2027 efficiency and sustainability Future ability 2026 Positioning 2025 2024 2023 6 12 18 24 Bilfinger Today months Efficiency Program Operational Excellence Bilfinger SE | Capital Markets Day 2023 | February 14, 2023 pag
Slide 65: Financial targets
Financial targets 2024 2025-2027 Organic Growth 4-5% CAGR Increasing EBITA ≥5% 6-7% margin Improving Cash >70% >80% Conversion1 1. Cash Conversion: FCF / EBITA Bilfinger SE | Capital Markets Day 2023 | February 14, 2023 page 3
Slide 66: Market and self-propelled organic growth
Market and self-propelled organic growth: Europe, Middle East, North America Overall growth projection M&A CAGR in 2-3% addressable market Market expansion 4-5% CAGR Offering ~2% Geography 2022 Market growth Self-propelled growth 2023-2025/27 Bilfinger SE | Capital Markets Day 2023 | February 14
Slide 67: Business model
Business model Business Parameters to drive Vision model business model Our business model No. 1 for customers in Addressable market enhancing efficiency is based on enhancing our and sustainability Competence customers’ profitability by Offering improving efficiency and Organization sustainability
Slide 68: Strategic levers
Strategic levers Functional Organization 1. Efficiency Program Competence Development Procurement Standardization & Bundling 2. Operational Excellence De-Risking Digitalization & Innovation Market Expansion 3. Positioning Sustainability Partner Sustainable Bilfinger Bilfinger SE |
Slide 69: Bilfinger tomorrow
Bilfinger tomorrow Digitalization New builds & Consultancy Engineering Maintenance & Turnarounds Modifications Others Pharma Projects & Biopharma 10% 15% 20% Oil & Gas 15% 30% Chemicals & Energy Frame & 80% 30% service contracts Petrochemicals tomorrow today Pharma Others & Biopharma 10% Projects 20
Slide 70: Capital Allocation to drive Total Shareholder Return
Capital Allocation to drive Total Shareholder Return Revenue Growth EBITA Improvements Cash Conversion Dividend: 40-60% of adjusted net profit and continuous growth Organic growth M&A Share buyback Adhere to financial policy and achieve investment grade rating Bilfinger SE | Capital Markets Day 2023
Slide 71: No. 1 for customers in enhancing efficiency and sustainability
Bilfinger Leading in Industrial Services No. 1 for customers in enhancing efficiency and sustainability