Bilfinger Se · XETR:GBF
Bilfinger — Investor Day (February 2020)
63 slides from Bilfinger's investor day presentation, Feb 13, 2020
Slide 1: Capital Markets Day 2020
BILFINGER SE Capital Markets Day 2020 Tom Blades | Christina Johansson | Duncan Hall February 13, 2020
Slide 2: Capital Markets Day 2020 presenters
Capital Markets Day 2020 Tom Blades (CEO) Christina Johansson (CFO) Duncan Hall (COO) Bilfinger SE | CMD | February 13, 2020 2
Slide 3: 1. Introduction
BiLFINGER 1. Introduction
Slide 4: FY 2019: Delivered
FY 2019: Delivered Outlook FY 2019 Actual FY 2019 Revenue Mid single-digit organic growth +6% EBITA adjusted Significant increase to more than €100 million €104 million Net profit Significant improvement, at least break-even €24 million Free Cash Flow reported Positive1) €57 million 1) Notwi
Slide 5: FY 2019: Revenue, earnings and cash targets met
FY 2019: Revenue, earnings and cash targets met Orders received FY 2019: underlying markets stable, org. -4% from high 2018-level Q4: org. -4%, award of major projects shifted to 2020 Revenue FY 2019: strong organic growth of 6% Q4: slight organic decrease EBITA adjusted FY 2019: significant increas
Slide 6: FY 2019: Cyclical strong cash development in fourth quarter
FY 2019: Cyclical strong cash development in fourth quarter Liquidity Reported free cash flow positive at €57 million DSO improvement by 10 days in Q4 Balance sheet / dividend Solid balance sheet Maintain baseline dividend proposal of €1.00 per share Outlook 2020 Stable organic revenue development F
Slide 7: 2. Preliminary results 2019
BiLFINGER 2. Preliminary results 2019
Slide 8: Decrease in orders received due to shift of major project awards to 2020
Decrease in orders received due to shift of major project awards to 2020, especially in Technologies Development of orders received • Orders received -5%/-4% -7%/-4% FY: Decrease (-7% / org.: -4%) 1,114 1,133 due to timing of bigger project 971 997 1,057 4,459 Orders 4,159 awards in Europe received
Slide 9: Revenue growth and EBITA adjusted meet expectations for FY 2019
Revenue growth and EBITA adjusted meet expectations for FY 2019 Development of revenue and profitability • Revenue -4%/-2% +4%/+6% FY: 4% increase (org.: 6%) based 1,115 1,147 1,101 on good market demand 1,008 1,071 4,327 4,153 Revenue • EBITA adjusted (€ million) 2.4% FY: EBITA adjusted as well as
Slide 10: Gross margin increased to 11.3% in Q4
Gross margin increased to 11.3% in Q4, further improvement remains major focus for 2020 and 2021 Adjusted gross profit (€ million) 412 391 121 (9.5%) 117 (9.4%) 112 (11.3%) 0 (10.5%) 0 (10.2%) 0 0 0 FY 2019: Amortization: €4 million 391 412 117 112 121 (9.5%) Depreciation: €108 million (9.4%) (10.5%
Slide 11: Adjusted SG&A ratio at 8.0% for FY 2019
Adjusted SG&A ratio at 8.0% for FY 2019, a further step towards 2020 target of 7.5% Adjusted selling and administrative expenses (€ million) 40 33 16 12 5 -89 -403 -380 -95 -109 (-8.1%) (-9.7%) (-8.8%) (-8.9%) (-9.8%) -84 -83 (-7.6%) -347 -93 (-7.8%) -362 (-8.0%) (-8.4%) (-8.7%) Q4/18 Q3/19 Q4/19 FY
Slide 12: Segment E&M Europe: sound performance throughout the year
Segment E&M Europe: sound performance throughout the year Development of revenue and profitability • Orders received +1%+3% +1%/+2% FY: -6% (org.: -5%), focus on 715 margin-accretive contracts 705 710 688 635 2,725 2,749 Q4: -13% (org.: -12%) below high Revenue prior-year level 5.3% (€ million) 4.0%
Slide 13: Segment E&M International: strong orders received development in Q4
Segment E&M International: strong orders received development in Q4 Development of revenue and profitability • Orders received -13%/-15% +21%/+15% FY: +9% (org.: +4%) 267 Q4: Significant increase (+44% / 222 238 912 org.: +38%) with major maintenance Revenue 213 752 193 order in ME (€ million) 10.5%
Slide 14: Segment Technologies: positive Q4, full year EBITA adjusted negative
Segment Technologies: positive Q4, yet full year EBITA adjusted still negative and below expectations Development of revenue and profitability • Orders received -4%/-4% +7%/+7% FY: -30% (org.: -30%) due to low order 145 145 level in underperforming entities and 136 139 538 shifts of major project aw
Slide 15: Strong cash generation in Q4 with DSO reduction
Strong cash generation in Q4 with DSO reduction of 10 days Positive net profit in quarter and full year Adjusted Adjusted operating cash flow 1) (€ million) Net profit (€ million) net profit (€ million) +40% +65% 24 2 227 181 49 21 24 Continuing 163 36 +36% Adjust- 110 71 operations 14 Adjust- -2 me
Slide 16: Outlook 2020
Outlook 2020 Actual FY 2019 Outlook FY 2020 Revenue €4,327 million Organically stable EBITA adjusted / margin €104 million / 2.4% Substantial increase to a margin of ~4% Free Cash Flow reported €57 million Significantly positive development Bilfinger SE | CMD | February 13, 2020 16
Slide 17: 3. Setting the Scene
BiLFINGER 3. Setting the Scene
Slide 18: Strategy 2020 "2-4-6"
Strategy 2020 „2-4-6” Our ambition We engineer and deliver process plant performance 2 Service Lines 4 Regions 6 Industries • Technologies • Continental Europe • Chemicals & • Pharma & Where to play • Engineering & Maintenance • Northwest Europe Petrochem Biopharma • North America • Energy & • Metal
Slide 19: Stabilization phase complete, moving on from build-up
Bilfinger 2020 Stabilization phase complete, moving on from build-up ….. Value Stabilization Build up Build out ▪ Process and system ▪ Strategy defined ▪ Top line growth resumed harmonization fully rolled out ▪ Organization announced ▪ First successes in new growth ▪ Performance culture established
Slide 20: Status of targets communicated February 2017 for 2020
Status of targets communicated February 2017 for 2020 Ambition 2020 2019 achievement level Revenue growth CAGR > 5% based on 2017 6%1) ✓ Gross margin improvement 200bps ~0bps ✗ SG&A reduction 300bps 2019: 250bps target 2020: 300bps ✓ EBITA adjusted Maintenance 3 to 5.5% E&M: 4% ✓ margin ✗ Engineer
Slide 21: Bilfinger 2020+ Build out phase
Bilfinger 2020+ Build out phase Build out ▪ Process and system harmonization fully rolled out ▪ Performance culture established ▪ Productivity wheel in full swing ▪ Complexity significantly reduced ▪ … Financial ambition reached Bilfinger SE | CMD | February 13, 2020 21
Slide 22: Global trends
Global trends Aging Assets & ESG / Climate Skilled Labor Data & Artificial Asset Integrity Change Shortage Intelligence Europe & US: Aging assets ▪ CO2 limits Europe ▪ Machine learning ▪ Increasing maintenance ▪ Emissions & Air pollution ▪ Demographics ▪ Predictive / prescriptive costs ▪ Clean energ
Slide 23: Bilfinger core capabilities
Bilfinger core capabilities Skilled labor Domain Expertise Digitalization ▪ Europe’s #1 Maintenance Services ▪ Engineering / Process knowledge ▪ Bilfinger Digital Next Company ▪ Focus on key industries ▪ Convergence of BMC & BCAP to ▪ Leading Employer Branding ▪ Customer intimacy / collaboration dig
Slide 24: Our capabilities addressing global trends
Our capabilities addressing global trends Global Trends affecting our business Bilfinger Aging Assets & ESG / Climate Skilled Labor Data & Artificial capabilities Asset Integrity Change Shortage Intelligence Skilled Fabric maintenance Circular economy Employer of choice Cloud analytics labor Domain
Slide 25: Strategic Assumptions
Strategic Assumptions Geographic Industry Digitalization Engineering & War for focus focus Maintenance and talent Technologies ▪ Europe ▪ Oil & Gas ▪ Enabling opportunity ▪ Technologies ▪ Skilled blue collar is ▪ North America ▪ Chemicals & ▪ Driving productivity support Engineering a differentiator
Slide 26: Strategic Imperatives
Strategic Imperatives Unique service offering/ Integrity & HSE People Differentiators Asset light model Attract ▪ Multi-service provider ▪ ROCE focus ▪ We will not compromise Motivate ▪ Continue to innovate our service ▪ Strict working capital Retain and commercial offering management Develo
Slide 27: Structural demand for services intact
Structural demand for services intact Drivers 5.5% CAGR petrochemical global capacity increase (2020-2024) Customers CAPEX/ E&Ps1) generating substantially more cash today despite far lower oil prices OPEX of active refineries and petrochemical plants in our focus regions > 60 % are older than 20 ye
Slide 28: Leading position in E&M key European markets
Leading position in E&M key European markets United Germany Belgium/ Nordics Poland1) Austria/ Kingdom Netherlands Switzerland Market Size2) ~ 25 €bn Expected market development Bilfinger market #2 #1 #2 #1 #1 #1 position # of employees 3,700 5,000 2,500 4,000 4,500 1,800 Rest of Europe = 2000 FTE 1
Slide 29: Bilfinger is a People Company
Bilfinger is a People Company Other Operations E&M 2019 White collar 450 Middle East Blue collar 450 ------------------------- E&M 2019 Total 900 White collar 2,000 Blue collar 1,600 ------------------------- Total 3,600 Bilfinger North America Europe Bilfinger 2018 2019 Revenue ▲ 4.1 €bn 4.3 €bn E&
Slide 30: HR – Recent initiatives and imperatives
HR – Recent initiatives and imperatives Recent initiatives Imperatives Leadership “Change Management” Skilled labor strategy Attract Retain Motivate Develop Critical entities – right sizing First level leadership HRcules (SAP / Success Factors) Critical positions Project Manager Contract
Slide 31: HR success stories
HR success stories Employer Branding Electrical Mechanical IT & Digital War for Talent Applicants after Go-Live 23,500 Offers made 1,916 Offers accepted (75 %) 1,437 Candidates in HRcules 30,400 ISP – First Level Leadership Cross border opportunities OUR Erection + dismantle costs / ton Productivity
Slide 32: Revenue growth in all regions and industries
Revenue growth in all regions and industries Split1) per business unit Split1) per industry 2020-2024 2020-2024 Share of Share of Share of Share of CAGR total 2020 total 2024 CAGR total 2020 total 2024 Chemicals & E&M 4% ~30% ~27% 3% ~65% ~59% Petrochem Europe Oil & Gas 5% ~30% ~30% E&M ~4% ~4% 7% M
Slide 33: 4. Bilfinger Operations
BiLFINGER 4. Bilfinger Operations
Slide 34: We never compromise on integrity and safety
We never compromise on integrity and safety Safety is good business Integrity is non-negotiable LTIF1 1.2 1.0 0.85 Fully integrated Prevent 0.74 Established compliance 0.8 0.67 Detect culture 0.6 Self- Sustainable focus optimizing 0.4 Respond compliance Continuous learning 0.25 cycle 0.2 Part of our
Slide 35: Sustainable value creation
Sustainable value creation Top Line +5% revenue CAGR Bottom Line >200 bps. gross margin 1 Increase integrated services 5 Boost execution performance 2 Intensify customer collaboration 6 Decrease operational costs 3 Capitalize digitalization & innovation 7 Utilization & efficiency increase 4 Lift val
Slide 36: New organization set up for driving profitable growth
New organization set up for driving profitable growth Empowerment I Simplification I Efficiency Executive Board – COO/CFO 1 Facilitate growth and capitalize innovation & AUT/CH BeNe GER UK NA ME TECH POL Nordics digitalization Global Development 2 Increase efficiency and recovery, reduce costs & Ope
Slide 37: Global Development: secure the future
Global Development: secure the future Facilitate top line growth I improve margins I capitalize on innovation & digitalization Global Development Ambition Further leverage Bilfinger Facilitate ▪ Roll out service products (BMC,BTC,BCAP etc.) globally capabilities worldwide growth ▪ Increase integrate
Slide 38: Convergence of digital and domain expertise
Convergence of digital and domain expertise Cognitive Sensors Value Proposition Customer intimacy and access Scaffolding App Cost Reduction Smart search Breadth of services Engineering Digital internal processes Asset Integrity Mobile solutions Improvement Digital Domain Expertise Expertise Highly s
Slide 39: Global Development: Integrated solutions
Global Development: secure the future Top line growth I Integrated solutions BP Deutschland (Ruhr Oel GmbH) SABIC Neste refinery Germany, Gelsenkirchen-Scholven United Kingdom, Teesside Finland, Porvoo Decisive factor was vision of Bilfinger in Bilfinger engineer minimum cost solution Mobilization o
Slide 40: Global Development: Customer coverage
Global Development: secure the future Top line growth I Customer coverage Ruwais CF Fertilizers Chevron United Arab Emirate United Kingdom, Ince / Billingham USA, Offshore, Gulf of Mexico Major Maintenance Framework in Integrated multi-skilled service solution Contract service expansion Middle East
Slide 41: Global Development: New energy
Global Development: secure the future Top line growth I New energy EDF Hinkley Point AVR, Carbon Capture Utilization Cryostar LNG stations Technologies, United Kingdom The Netherlands, Duiven Germany, Poland, France, BeNe Technology expertise and local delivery First industrial scale Carbon capture
Slide 42: Operational Excellence: deliver the year
Operational Excellence: deliver the year (focus 2020) Improve bottom line margins | increase utilization and efficiency I boost execution delivery Operational Excellence Ambition Excellence in execution Boost ▪ Increase recovery and optimize output performance execution ▪ Set-up for success (checkli
Slide 43: Operational Excellence: Examples (1/2)
Operational Excellence: deliver the year Bottom line efficiency I Examples (1/2) Boost execution Increase efficiency Linde-Braskem, La Porte Total refinery, Antwerp Initial situation ▪ Largest project undertaken by Bilfinger in ▪ Performance issues impacted contract North America – critical to build
Slide 44: Operational Excellence: Examples (2/2)
Operational Excellence: deliver the year Bottom line efficiency I Examples (2/2) Operational KPIs Performance culture RWE, Mühlheim-Kärlich Bilfinger UK entity, Aberdeen Initial situation ▪ Contract for the dismantling of steam ▪ Margin pressure due to market conditions generators of Nuclear Power P
Slide 45: Deep Dive Technologies: individual weaknesses with high impact
Deep Dive Technologies: individual weaknesses with high impact Dedicated programs identified to secure successful turnarounds Final exit from conventional Energy & Legal power performance projects Utilities Entity 1 Focus on Nuclear 45% Legal Pharma & Entity 2 Biopharma 35% Legal Entity 3 Exit local
Slide 46: Deep Dive: Technologies transformation approach
Deep Dive: Technologies Intensive care and structured transformation approach for the two struggling LEs Baseline Changes impacting 2020 Suffering from legacy New projects with solid stage gate approval process and projects intensified project control mechanisms. Exit projects/sectors Operational in
Slide 47: Gross Margin Band Width by Activity
Gross Margin Band Width by Activity Gross Margin Execution capabilities Target Margin stability Average margin level ~15% of revenue ~85% of revenue Industrial Technologies Auxiliaries Construction Multi-Service Maintenance Engineering Services Actions to sustainably achieve Gross Margins > 12% in p
Slide 48: 5. Bilfinger Financials
BiLFINGER 5. Bilfinger Financials
Slide 49: Key Financials – Development since 2016
Key Financials – Development since 2016 Progress made, but further improvement required Revenues [€ million] EBITA adjusted [€ million] / margin [%] org. +5% CAGR1) >250 org. +6% org. +6% org. +0.2% >5,000 4,249 4,153 4,327 >5.0% 4,044 104 65 2.4% 15 1.6% 0.4% 3 0.1% 2016 2017 2018 2019 … 2024 2016
Slide 50: Gross margin improvement and SG&A efficiency to 5% EBITA margin
Gross margin improvement and SG&A efficiency will lead to 5% adjusted EBITA margin target by 2021 and in years beyond on a reported level Adjusted >12.0 reported gross margin ~12.0 Gross margin improvement to a margin of ~12% in [%] 9.8 9.4 9.5 2021 and >12% beyond 8.4 ▪ Execution improvement ▪ Disc
Slide 51: Special items will phase out in 2021
Special items will phase out in 2021 Cash effects 60 Restructuring P&L effects and SG&A 40 efficiency 55 30 10 25 IT investments 20 20 5 5 Total payout from 2020 2021 Total P&L effect 2020 2021 special items from special items 2020-2021 2020-2021 Special items w/o disposal gains/losses Bilfinger SE
Slide 52: Levers for SG&A efficiency improvement
Levers for SG&A efficiency improvement Target of 160 legal entities achieved one year ahead of schedule Further reduction of organizational complexity ongoing Current status of legal entity reduction project Target of reduction to 160 legal entities reached one 279 ~-40% year earlier than planned 23
Slide 53: Levers for SG&A efficiency improvement: process harmonization
Levers for SG&A efficiency improvement Process and system harmonization with substantial program extensions Extended functionality Extended target scope Degree of target achievement ERP/SAP in terms of revenue 100% as of Mar. 31, 2021 ~90% as of Dec. 31, Additional add-ons for DONE 2020 Revenue ERP
Slide 54: Segment E&M almost at target
Segment E&M almost at target Segments E&M Revenues [€ million] Segments E&M EBITA adj. [€m] / margin [%] >5% 3,661 CAGR1) ~5% 4% 143 2,749 101 912 42 2019 … 2024 2019 … 2024 E&M Europe E&M International 1) CAGR based on 2020 sales Bilfinger SE | CMD | February 13, 2020 54
Slide 55: Working capital management
Working capital management Key to higher cash conversion DSO: 74 DSO measures WIP 32 Reduction of WIP as main objective Accounts ▪ Project business: receivable 54 ▪ Increased bundling leads to improvement of contract and better negotiation position, e.g. claim management -11 payment terms Prepayment
Slide 56: A robust financial model delivers predictable shareholder returns
A robust financial model deliver predictable shareholder returns Sustainable revenue growth Selective organic growth Low-risk and recurring Bolt-on acquisitions business with a strong focus on Europe and a Industry-leading margins diversified customer base Gross margin improvement SG&A efficiency St
Slide 57: Capital allocation priorities
Capital allocation priorities Financial Intended M&A policy Dividend Policy Criteria ▪ Actual rating S&P: BB/outlook ▪ Floor of €1.00 is confirmed ▪ EBITA accretive one year after stable ▪ Sustainable dividend stream integration ▪ Policy to maintain conservative going forward: 40 to 60% of ▪ ROCE ex
Slide 58: Focused M&A strategy
Focused M&A strategy Targeted bolt-on acquisitions to complete our regional and technical footprint Sources of funds Proceeds from 49% Apleona shareholding sale: ≥ €240 million (current book value) Bolt-on M&A priorities: Core Geographies and Core Industries with high synergy potential Growing lever
Slide 59: 6. Summary
BiLFINGER 6. Summary
Slide 60: 2-4-6 still holds
2-4-6 still holds 2 Service Lines, 4 Business Units, 6 Focus Industries Our ambition We engineer and deliver process plant performance Where 2 Service Lines 4 Business Units 6 Focus Industries to play E&M – Engineering & E&M Europe Chemicals & Pharma & Maintenance E&M North America Petroch
Slide 61: How to win
How to win Global Trends What we are What we are aiming for Other Operations Global Trends affecting our business E&M 2019 Bilfinger Aging Assets & Climate Skilled Labour Data & Artificial White collar 450 capabilities Asset Integrity Change Shortage Intelligence Middle East Blue collar 450 --------
Slide 62: Financial targets 2024
Financial targets 2024 Revenues EBITA ROCE Free Cash margin reported Flow sustainably min. reported >5 5 8-10 >200 €bn % % €m i.e. organic growth of ~5% CAGR from 2020 onwards Investment Grade (mid-term perspective) Sustainable dividend stream going forward Policy: 40 to 60% of adjusted net profit N
Slide 63: Bilfinger SE | CMD | February 13, 2020
Bilfinger SE | CMD | February 13, 2020 63