iShares Government/Credit Bond ETF Price & Performance (GBF)

Thank you, Martina.

Hello, everybody. Yeah. A warm welcome to all of you for our presentation for the full year 2024, the quarter four twenty four as well as the outlook for 2025. We had quite a successful year for the Bilfinger Group. We achieved all financial targets, Orders received 13% up Revenue, 12% up EBITDA from 4.3% to 5.2%.

Improved.

And the cash flow €122,000,000 to €189,000,000 Very important and that the sixth quarter in a row [indiscernible] We have an earnings per share on the full year of 04/1979 and we propose as a dividend 2.4. Per For the year 2024, we look into the markets, we see an overall stable demand for our products in volatile markets. The outlook for 2025 is €5,100,000,000 to €5,700,000,000 on the revenue and a 5.2 to 5.8 in the EBITDA. We will do we will operate a new capital market stay on the December 2 this year where we will announce new midterm targets up to the year 2030, As I said on the highlights, targets for 2024 achieved. The revenue, what you see on the left side, we had a guidance €4,800,000,000 to €5,200,000,000 billion euros which is an increase organically of 2% and reported of 12% versus '23. The EBITDA improved 39% And actually, the margin from 4.3% to 5.2%, which is quite a good improvement. The outlook for the year we had on 4.8 to 5.2. The free cash flow actually came out higher than we were guiding for. The guidance was €125,000,000 to €165,000,000 percent and we came out 189%, which is a 55% improvement.

Adjusted actually an 88% improvement. So, the year 2024 was again for the Bilfinger Group quite a successful year. Before we go further into financial figures, some about the market as well as sustainability and other things. At first, to the sustainability, our ESG keep figures. Important for us important for our clients, important for our suppliers too is, of course, the occupational safety. And that is what you find on that quite lively slide in the mid And you see here two indicators. One is the TRIF, and the other one is the LTIF. On the TRIF, we had a very positive development to 1.12 coming from a 1.19 But on the LTIF, we had a deterioration. A negative trend. And that is where we put all efforts in it that we can present in the year 2026 for 2025 a significant better result. Important based on the efficiency program the transformation what we do with the company, we would like to highlight the spend for learning and development. We promised to do more than 0.5% of our revenue And in 2024, we achieved that. Last but not least, on that slide, about the environment on the left side.

In 2024, first time we were able to report on scope three up and downstream for the greenhouse gas emissions. Out of that, we come to our, what we think quite famous quite famous sustainable business classification, as you know, Brazil forgot So we implemented in beginning of 'twenty three our own classification, what you know when you go into an electronic store and looking, for example, for a fridge. A is the most green classification and d is the least green or non green. And you see that we despite quite a significant improvement in the revenue, the percentage split is actually not moving really different than in 2023. That's mainly based on the acquisition, what we did 2024. But when you look through all the four classes, the A, B, C, D, you have on the right side some examples what we announced as orders. To get a link into it. A for us is clear green, sustainable, 100% improvement. B, is what we call indirect improvement and c, are very indirect improvements. And D is, of course, activities where we can't claim any sustainability in Out of that, we go into the industry, into the market development.

We are mainly in chemical, and petrochembs, oil and gas, energy as well as pharma and biopharma. All the food industries develop actually differently. You see that on the left side with the production index. The production index is indexed to the base here 2019 as the last pre corona year. And it's easy to see that despite Pharma and Biopharma, which enjoys a significant improvement in production index, since 2019 all the other three industries are hardly really moving In that, And, of course, there are per industry different arguments. In the chemical and petrochem industry, we see significant regional differences. We see investments in The Middle East, in North America, parts of Europe and especially in Germany, actually, the opposite. But the outsourcing potential, the willingness of the client to give industrial service to providers like us is actually on a very good level. Our demand in that industry, we would call that stable. The oil and gas, we see based on several reasons, an increase in global oil production, and the outsourcing potential, the willingness of our customers to do more of the asset management, maintenance and so on with us is quite good. We see the demand in that industry growing and positive.

Then to the energy. Energy, we see increasing demand, but complete different setup. Alone in Europe with the nuclear boom, what we see all over despite, of course, Germany, we have in that sector a positive outsourcing potential, and we see a positive market develop. Our smallest industry where we are in around 10%. [indiscernible] And the demand is great. What is the driver? It's actually the localization of supply and innovation of new products faster to the market. Both are the main drivers in that [indiscernible] Out of that, we look into some selected orders to see that you can see what we mean when we talk about these different industries. The first is with Gazoni in The Netherlands, quite a good customer of us, With the acquisition of the former Flourer Stork, we were able to get a ten years partnership with Gazoline. So the M and A enabled us to have a bigger contract, a bigger footprint. Quite a good work. Then in the middle part of the slide, you see from Norway Eneos, Another extension of a long term contract in Engineering, Fabrication, Maintenance and Management Services which proves that we, over decades, can add value, efficiency improvement, sustainability improvement to our clients.

On the right side, it's about Pharma and Biopharma in Austria. Here, with a pharmaceutical company, we we do the engineering, procurement, the fabrication and other stuff to enable the client to produce better and more efficient. You look through all the three contracts, you see there's a lot of commonality, and that's a big part of our strength. 80% of the business, what we do no matter which country, no matter which industry is more or less the same. Out of that, into innovation, because that's a big driver for our competitiveness. Today, I would like to introduce the so called Bilfinger SERVICE effectiveness [indiscernible] It's, of course, a digital tool for rotating equipment like turbines, pump where we are able to predict, to calculate before things happen for the client, what is the energy consumption, what is the CO2 footprint, what to do to improve it and which effect it has on the whole plant as well as on the whole efficiency. This unique calculation tool as it on a digital format actually enables us to offer to the client up to more than 5% plant availability improvement more than 25% efficiency improvement and more than 15% CO2 reduction.

Out of that, We go into the figures. Our well known opportunity pipeline is on the top of that page. And it's over two years, month by month, And the highlighted areas is actually from the left to the right, the quarter 04/2022, then the quarter four in 2023, and then the quarter '4 last year in 2024 in blue color. When you look the figures it is indexed to the October on a 100 and you see that we had in last year or in the year 2023 in the fourth quarter an average 110 where we can bid on is actually The sum of, I call it, the cake from the clients where we can bid on you see that the development over the year had actually peaked into May and then was going a little bit down and at the end coming to 107 in average. So the market has more or less a side movement slightly up. As we say, stable market environment. If you look into the orders received, you see how it develops from twenty two fourth quarter, twenty three fourth quarter to quarter four in 2024.

And there you see an increase of 8% reported at minus 5%. These can't of fluctuations quarter on quarter is absolutely normal for us. We call it the seasonality. In the year. Very positive, we think, is, of course, the order backlog development, From 'twenty two to 'twenty three, it was a 5% organic growth. And from 2023 percent to 2024%, it was a 7%. And with the M and A actually a reported 22% improvement on the order backlog. Now to the further figures to my colleague, Mati. As the group's CFO.

Thank you very much. Good afternoon, ladies and gentlemen. Some more details on the fourth quarter performance. Overall, I would say, quarter four was a fairly good quarter. Very much in line with the full year development. As you can see, from the numbers here, EBITDA throughout the year very good ending up with 5.5% compared to 5.8% in the quarter for 2023. So overall, a very solid EBITDA margin progression and development. Revenue up by 14% in total, 1% organically with a book to bill of almost one point zero so also continuing our Very good. Trend plan. Free cash flow. This has been mentioned a number of times. We had four positive quarters this year plus two quarters in '20 in 'twenty three makes for six consecutive quarters with positive free cash flow for the Bilfinger Group that [indiscernible] working capital management efforts Bilfinger fruit, we have a lower intra year working capital and consequently the year end quarter '4 numbers are lower than in the prior year as we have communicated before. Take a bit of a look into the segments and we start off with the segment Europe, quarter four performance orders received in quite difficult or challenging market environment, I would say 5% organically and together with the STORK acquisition, plus 25% over quarter four twenty twenty three Again, a very good achievement and a testament to the strength of the Bilfinger Group.

We do see a bit of a mixed picture across regions and industries, As Thomas said, very typical seasonality throughout the year. Importantly, we have achieved some contract renewals in the chemicals and petrochemicals chemicals industry. And as everybody knows, and as it's written in the center here, the industry has its challenges, particularly in Germany, And in that respect, again, a success for the Bilfinger Group. [indiscernible] but in total plus 17%. Organic growth, particularly in Pharma and Biopharma, Energy and Oil and Gas in line with the market [indiscernible] EBITDA margin consistently above 6% for the last three quarters. So again, as stabilization throughout the year, very good margin recognition and a very good performance by our European colleagues [indiscernible] Over to International. The revenue is up 6% organically, 10% in total, we do see or we did revenue growth in both regions. Released and North America and across all industries. In The Middle East, we have seen new contracts from the energy industry something that has really taken off in 2020 EBITDA margin is down from 5.4% to 1.6% In the fourth quarter, we have taken a little bit more risk provisioning for the project business that we have discontinued in North America We're on the very last project that is being completed right now And that took a bit of a hit there.

Orders received minus 22% While we have seen growth in The Middle East from new clients, rollovers of frame contracts What we have seen in The United States is nothing unusual every time a new administration moves in decisions are being slowed down until the new administration takes its footing. And consequently, the orders received here were a bit lower than what we had seen in 2023. Finally, Segment Technologies. I start off with EBITDA margin. Progressive expansion as a result of product mix, operational excellence, and efficiency program So you can really see our strategy at work here 8% in the fourth quarter, up from 6.3% In fourth quarter twenty twenty three. On the order intake, while it shows minus 30% over the fourth quarter twenty twenty three, This is expected It's an expected decrease year over year Compared to the quarter three and quarter [indiscernible] where we had very strong order intake, so that's normal [indiscernible] I think it's worthwhile pointing out that the backlog [indiscernible] the course of the year grew by 14%, So we're working off a very good backlog in technologies into 2025. Back to the group. Again, in total for the year, orders received and revenue up 1312% including the acquisition 2% For each in organically.

Orders received at SEK 5,300,000,000.0 revenue at €5,040,000,000 for 2024, a very solid performance by the Bilfinger Group. And the book to bill of 1.06 Also, indicates further growth as we move into 2025. Profitability, I mentioned it before. Euros $264,000,000 in EBITA, equal 5.2% EBITDA margin up by 39% over 2023. As a result of our margin improvement in gross profit, 60 basis point from 10.3% to 10.9%. And an improvement of the SG and A ratio 6.6% to 6.3% Despite the fact that the acquisition came in at a much higher cost rate, So again, a proof point that the efficiency program in our strict cost discipline turning out the results that we have indicated and expected. A quick look at the segments for the full year. So revenue in Europe SEK 3,500,000,000.0, up 1%. Revenue in international up 3%, SEK $710,000,000 and revenue in 5% to $732,000,000. If we look at the book to bill [indiscernible] almost one point zero for international and 1.1 for Technologies Again, showing that Bilsinger is on a and if we look at the EBITDA margin with the exception of international, We are also looking at sustainable Net profit and earnings per share when your EBITDA increases as much as it did for Bilsinger, you would expect net earnings go up However, last year, we had a positive impact from the recognition of deferred tax asset of about 61,000,000 So that was considered last year and hence the the [indiscernible] profit did not move much in 2024.

Earnings per share €4.79 The dividend proposal as Thomas mentioned earlier, is €2.4 That is based on our adjusted net profit, which is calculated [indiscernible] tax rate went up from €117,000,000 in 2023 to 169,000,000 in 2024 and the payout ratio is equal to 53% which is in line with our dividend policy. Again, cash flow not only in the fourth quarter, quite good, but also throughout the year, very strong operating cash generation, from SEK 151,000,000 to SEK $248,000,000 Free cash flow improved by 55% for a cash conversion rate of 71%. And if you use adjusted figures, then the cash conversion rate was even 88%. We spend about 1.3% of revenue on CapEx That has not changed in 2024. Over 2023, And one key parameter that we introduced is the net trade assets over revenue. We started off in 2023 with 12% We achieved 10% as a ratio. And as you know, our midterm target is should be 8% or less.

So we have done quite good work in 2024 to improve that KPI. Net liquidity obviously follows the cash flow Nothing special to report about here, nothing that you [indiscernible] The drop in the first quarter is related to the repayment of bond by the end of March Leverage net debt over EBITDA came out at 0.54 at the December, so well below two point zero zero upper ceiling that we have given ourselves. Capital allocation, no change. I think it's worth mentioning that M and A in 2024 was fully funded by ourselves The integration has made extremely quick [indiscernible] will be completed early twenty twenty five We have announced a share buyback also funded by ourselves, obviously, And by the February, we had acquired about 0.35% of the outstanding shares and that's roughly equal to 15% of the share buyback program. Obviously, a very sound financial policy. Trying to achieve investment grade rating and we're quite optimistic that this is not too far away. I would say. And with that, leave it to Thomas to talk about guidance 2025. Thank you very much, Mati.

So let us start with the guidance for the [indiscernible] You see here Europe International Technology and Reconciliation Group. And the guidance for Europe is actually EUR 3,500,000,000.0 to EUR 4,000,000,000 And you have on the left side the SEK 23,000,000,000 and the SEK 24,000,000,000 full year figures. [indiscernible] to compare that. And you see that we have in the guidance for Europe an improvement versus 2024. We have the same in the international as well as the same in the technology. Regarding the Reconciliation Group, we don't talk about improvement or not improve If we then come to the group guidance, Here on the group guidance in the blue color, [indiscernible] what we said before, 5.1% to €5,700,000,000 the €5,200,000,000 to 5.8% EBITDA and the 210% to two seventy on the cash flow. When you look from €23,000,000 to twenty four, twenty twenty five on revenue, on EBITDA as well as an S on the cash flow, you see that we are definitely on a positive significant progress towards our midterm targets with the 6% to 7% EBITDA, more than 80% cash conversion, we will deliver a four to 5% CAGR. So out of that, we see the year 2025 as a positive year in front of us despite the German election, which has some slowdown, despite the U. S. Election, which had some and has some slowdown, that's all priced into that guidance.

And we think that the second half of the year 2025 will have more tailwind than we may be feel at the moment with all the things going on everywhere. But we take it, of course, very positive if we see big investments figures for infrastructure coming, not only in North America and in The Middle East where it's more or less standard, in Europe, especially in Germany too.

So out of that, short summary, more than EUR 5,300,000,000.0 on the order intake, more than €5,000,000,000 on the revenue, more than 5% EBITDA. With that, we actually fulfill a promise from 2016 Sorry, it took a while, but, now we are there. We have a good cash flow. What makes us very happy is the performance of our organization six quarters in a row to deliver positive cash flow. That is how it should be. We propose a €2.4 a dividend, we see stable demand in volatile markets outlook asset €5,100,000,000 to €5,700,000,000 and 5.2% to 5.8% EBITDA. And very important, put that please in your calendar, Capital Markets Day on the December 2, where we will announce new midterm targets up to the year 02/1930. With that, we would like to give back to Martina.

Thank you very much, Thomas and Matti, for the presentation. We are now coming to the Q and A. Ladies and gentlemen, you can now ask your questions either via phone by pressing star and 1 So I see already a few questions on the phone line. And the first question is from Michael Kuhn from Deutsche Bank. Mike, your line should be open.

Yes, good afternoon. Thanks for taking my question. One on the guidance and I guess that would be for Mr. Schulz. So I heard you talking Bloomberg about it as well. Quite a broad range looking at the top line and that's especially driven by segment Europe. At the low end, acuity consolidation effects, it would even be like a small shrinkage You spoke about, let's say, how decisively politicians would act and different economic scenarios. Maybe you could give us a few more details on that what your view is how 2025 could play out and how the impact on your company would be?

As you know, let me start from the West to the East. At first, U. S, we see that tariffs are coming up that will not hit us. Because we are not supplying goods between over the Atlantic Ocean, we supply knowledge and competence actually in both ways. But we see with all the events ongoing as especially in the governmental sector, to cut down that a lot of approvals and ordering out of that sector where we have part of the business like for the U. S. Army and so on. Are delayed So if that would go on, what we don't think in a very decisive government of Mr. President Trump If that would go on, we would end up that's one part of the scenario to go more lower than the midpoint. Then on the high part, of course, opposite. As fast as it goes gets sold, as better. Then we have the Middle East Actually, the Middle East is very much in line with that what we expect. There we don't see a big variation. It performs good. It performs well. Quite a lot of business opportunities. We can capture more. We are getting more in the positioning what we have in the strategy.

If we can realize that faster with the M and A target two what we announced quite often before, the same as in U. S, that would give us further tailwind. Then we come to Europe, Europe is the biggest for us. And it is important to see that with the German election, we have to see that the government gets formulated and what we hear what we all hear, not only Billfinger people, other 83,000,000 Germans too, or people living in Germany, if these big infrastructure investments are no matter if they are €400,000,000,000 €800,000,000,000 €900,000,000,000 if that comes or course, we will have a part of that too. As more gets realized, a small tailwind, as more we go to the upper range of the [indiscernible] Excellent. Thanks for that. One on cash flow and cash conversion. If I look at the guidance range, it's pretty much 80% across range including the 30,000,000 integration and efficiency cash out So probably close to 90% again as last year in terms of cash conversion. Is that a level that you think You have achieved on a sustainable level. So when we see cash conversion rates around or close to 90% going forward, That would be nice, Michael.

We're targeting 80% in our midterm targets. And I think if we can prove that over a number of years, then we have done and would have done very well. The last two years were quite favorable in terms of order intake. And order intake With advanced payments. They have certainly helped to improve our cash conversion rate We need to expect that this will normalize over the course of the coming [indiscernible] plus also as part of the de risking we intend to reduce the share of projects I would think with a range of 80% cash conversion rate, we are are well suited and that is what we're targeting for.

Thank you. And then the third and last question on The U. S. Market. So you mentioned you're, let's say, in the very final lack of Finishing last remaining bigger construction like projects. So I guess that topic should be done then. In Q3, financial risks. Is that assumption right? And secondly, is there anything new you can share out of the investigation around the harbor incident in Georgia? Thanks.

Yes. At first, the easier to answer part regarding Sapello Island, there is no new news. So there is nothing to report. Then regarding the construction projects, it's one leftover what we are working on and finalizing, and that's it. So it takes a longer while than we hope for. But things have to get worked through properly.

And this is all, let's say, properly provisioned at no, let's say, financial downside in in that project remaining?

Yes. What we see We are conservative people. So we are [indiscernible] We are not short in building our provisions. For that, what we see coming.

Excellent. Thank you.

Thank you very much, Michael, and thank you. We have another question on the phone line from Gregor, your line should be open up.

Hi, good afternoon. So I've got two questions. So just looking at your margins, so basically, I think the mid point, you're talking sort of 30 bps up, right? Last year, you had 90 bps up.

And then if memory serves me right, you kind of want to get into the middle of the corridor the 6% to 7% next year. So I guess the question is, Why do you think this year is sort of a moderate margin increase and next year it accelerates again? Or just being conservative or maybe I'm wrong on the sort of landing point next year? That's question one. Question two on coming back to cash flow. I mean, look, I appreciate your ratio is high, but the truth is that number is before leases and before finance expense, right? So we need take off another think €80,000,000 €90,000,000 or something like that and you're benefiting from some of the interest income on your cash, which I think is in the cash flow Correct me if I'm wrong. So look, I guess it's I think it's a definitional point, but I guess the point is do you think the 80% is ambitious enough, appreciate this tax? Considering those facts? Thank you.

Yes. I start with the we are conservative people.

That's I think we can say that. And what we are looking into is a sustainable profitable growth improvement. We are not believing to show quarters or years significant better for at any cost. We are not doing that. So when we look into the margin expansion, what we see in front of us this year is a little bit a special year. Because we have with the U. S. Election, a big part of the market a little bit in a slow activity mood at the moment.

And we have, of course, with Europe, quite a lot of hope that a new German government would more going into activity than only producing PowerPoint slides. So and that has a big impact on whole Europe. So out of that, It is in our plan to come to the 6% to 7%, and we said between twenty five percent and twenty seven So regarding how much we go in between 6% to 7%, we have to see how the year 2025 takes off. As I said before, there is a good opportunity If both areas, US as well as Germany with that Europe is doing the right things and the right timing and execute, that we actually can create quite a lot of tailwind throughout the second half of twenty twenty five, which may be then links to a higher level. That's the reason why we guided between five point two and five point eight, which quite a broad range. If it comes to the cash flow, Matig, would you join? Yes. I think we shouldn't be discussing definitions here. But as I said before on Michael's [indiscernible] I think 80% is ambitious. If I look at the the history of Wissinger, we've seen very volatile developments of cash flow in the last few years. 2024, first year with four positive cash flow quarters think that's a very good achievement and we're building on this one.

Plus also as I mentioned a significant level of advanced payments is not something that we can that we can expect year after year Consequently, I think the 80% for this organization is needs to be proven year after year after year If we find that we can do better, we will certainly raise the bar for ourselves.

Thank you. Can I maybe add one more on the sort of German infrastructure several times now? Yes. So your understanding of what they may be considering is what exactly obviously you're not in traditional roads. Bridge, I guess, it would be more energy infrastructure. Grids, I don't know, But give us some idea where do you think the Bilfinger Group would would participate specifically?

It's an indirect participation predominantly. It would strengthen a good investment a real investment into infrastructure not into funny things in real infrastructure improvement, will improve the competitiveness of Germany for further foreign investments [indiscernible] local investments, and that drives our business too.

When you talk what we can do, we are like a barometer. We are like a balance throughout all industries. The the possibility to invest is there. The willingness is there, but no one invests into political, not clear direction. No one invests If you see that infrastructure, labor and so on are in other parts of the world [indiscernible] No one invests if you need five times longer to get an approval and when you have it, you don't know if it works or not. No one invests in an area where energy costs are up to four or five times higher. So if all these things are getting targeted, which is not too difficult to do, then we see quite a lot of investment coming back to Germany or in Germany happen.

And that of course we as Billfinger participate in it.

Some will definitely happen because it can't go on as it was.

Thank you. Thank you very much, Grigel.

Dear ladies and gentlemen, be reminded that Greg, your line is open.

Yes. Thank you. Good afternoon.

Yes, my first question, you've kind of already touched on in the previous answers, but I'm I'm going to kind of elaborate a little bit more.

I was wondering if you could provide us some color on how your order intake, both in Europe and in The U. S, bearing in mind these pauses you have addressed, has been progressing in Q1 because it sounds to me like this is probably going to be a little bit more of a second half weighted year. And yes, and I guess in The U. S. There would be a pretty acute concern that temporary effects actually become more structural and long term. So I'd like to hear your thoughts there and then I have one quick Yes. Let us start with U. S. We saw in the last few years quite a lot of foreign investments especially in the energy related industry into The U. S. Actually quite a good market for that. Supported not only by the IRA, actually supported by fast decision making on the government side, lower energy costs and actually having an easier to do things environment, a motivating environment. Penalizing. Can that get a hit with high tariffs? Yes, could be. But what we see is that at the moment, we have a little bit like a slow time based on the government offices are not really working to 100% performance because a lot of cutting Discussions are from Elon Musk into the whole country.

So they slowed down. But the demand is there. The things have to be done. The approvals are on the way to get. The companies have the money. So we don't see really a negative scenario more than this break phase with election The United States. Then we go over to U. S. To Europe. In Europe, it is when we look into the order intake, no matter that the main industry, which is hit is mainly chemical industry, We still get orders. It's actually for us a very good business. But the difference what we see is if companies are under pressure and they don't know how the political decision making is on energy cost, infrastructure and so on, If we get an order for 100 after we finalize the order, we got 100. If we get into the more unlocked situation, that more spend comes through faster decision making, what everyone is now underlined today talked about that too. Then when we get an order 100, we will end up with 120, 130, 140.

And that is on the more positive scenario, what we think can good happen with that what is talked around not only related to the decision making versus Ukraine, infrastructure, energy cost and so on and so on.

Okay. Thank you. And the second question is just an easy one for you, Marty. But how large was the risk provision taken in international Q4? I'm sure it's probably an annual report but I don't have time to get that far yet. Thank you.

That's a few pages to read Craig. So It's a low single digit million euro number.

Okay. All right. Thank you. Thank you very much, Greg.

There are currently no further questions. I suggest to give it another chance that you can ask further questions. Either via phone by pressing star 1 or via the webcast in the chat. Let's give it a few seconds. Seems that there's no more questions coming in. So we conclude this Q and A session. Thank you very much for your participation. Of course, the IR team remains available for any further questions. You may have. Thank you very much and goodbye.