Bilfinger SE Company Presentation
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Bilfinger SE Bilfinger SE Company Presentation Christina Johansson, CFO UniCredit Kepler Chevreux GCC, Frankfurt January 22, 2019
Overview
Bilfinger at a glance
€4bn revenue
Leading international industrial services provider
Efficiency enhancement of assets, ensuring a high level of availability
and reducing maintenance costs
Clear 2-4-6 strategy with two service lines, four regions and six focus
thereof
recurring business >60%
industries
Combination of CAPEX-driven (E&T) and OPEX-driven business (MMO)
Orders Received* +13%
Large share of business with long-term frame contracts and high
€3.0m EBITA adjusted
retention rates
Well-established customer base with focus on process industries
Highly recognized safety and quality performance
Approx. 36,000 employees
Digital pioneer for the process industry based on FY 2017 and *9m 2018
Bilfinger SE | Company Presentation | January 2019 page 3
Back to Profitable Growth
2 Service Lines, 4 Regions, 6 Industries
Our ambition We engineer and deliver
process plant performance
2 Service Lines 4 Regions 6 Industries
• E&T – Engineering & • Continental Europe • Chemicals & • Pharma &
Where to play Technologies • Northwest Europe Petrochem Biopharma
• MMO – Maintenance, • North America • Energy & • Metallurgy
Modifications & Operations Utilities • Cement
• Middle East
• Oil & Gas
People & Customer & Organization &
Financials
Culture Innovation Structures
How to win
Bilfinger SE | Company Presentation | January 2019 page 4
Service Portfolio
Strong offering for capex and opex driven services
E&T – Engineering &
Technologies
OPEX
Packaged Units Turnarounds
Efficiency
Modifications
Maintenance
Expansions
Operations
Plant Expansions Emissions Maintenance Contracts
CAPEX
MMO – Maintenance,
De-Sulfurizations
Modifications & Operations Operations
Bilfinger SE | Company Presentation | January 2019 page 5
Compliance and integrity
Deferred Prosecution Agreement concluded
Starting Point First Steps Effective compliance World Class Compliance
system System
2003 – 2005 2013 – 2015 2016 – 2018 2019 onwards
• Nigeria corruption case • DPA • Extended DPA • Continuous
• Start of monitorship • Strong tone from the top improvement
• Exchange of leadership • Accelerated BCRP roll- • Value based
• BCRP start out compliance system
• Build up of compliance • Sustainable
organisation development
• Reduction of complexity • Compliance as
• Change of Culture competitive
Program advantage
• 12/2018: Compliance
program certified by
monitor
Bilfinger SE | Company Presentation | January 2019
• End of DPA
page 6
Growth potential through digitalization
Market potential
We see significant market potential in digitalizing the process industry
Estimated market potential
• More than 16,000 plants within 2-4-6 in Continental and Northwest
Europe
• ~4,000 of these plants are mid-sized type with strong appetite for
digitalization
• Varying acceptance rate per industry – highest acceptance
expected in Chemicals & Petrochem, Energy and Oil & Gas
• Yearly volume per actual client expected around 1-2 m EUR
• Total market potential in Europe calculated around 7 bn EUR
• Market penetration mainly driven by availability of brainpower
• Additional market potential in Middle East and North America
Bilfinger SE | Company Presentation | January 2019 page 8
Strategic position
Bilfinger is well positioned to be the frontrunner in the IoT of process industries
Process Industry Bilfinger IT Industry
Digitalization hurdles Building digital bridges Applicability deficits
• Requirement to • Deep knowledge of customer needs and • No access to plant
improve performance processes operators
• Lack of digitalization • Comprehensive digitalization know-how • Challenge to apply IoT
knowledge • Independent service provider knowledge to process
• Nr.1 in conventional services in Europe industries
WE MAKE DIGITALIZATION WORK!
Bilfinger SE | Company Presentation | January 2019 page 9
New analysis options
BCAP® provides a better decision-making basis
What has happened? What could happen? What should we do?
Descriptive Predictive Prescriptive
Analytics Analytics Analytics
Dashboards, reports Predictive maintenance Dynamic operation support
Bilfinger SE | Company Presentation | January 2019 page 10Improving our financial performance
Ambitions will be achieved in three stages
Value
Build out
Build up
Stabilization
Time
What does it mean in numbers?
How will we execute?
How will we measure and report progress?
Bilfinger SE | Company Presentation | January 2019 page 12We will address all P&L line-items
GROSS MARGIN
• LOA1 process
• Project management Impact on
gross margin:
improvement of
~200bps AMBITION2
ADDRESSING BOTH LINE ITEMS
EBITA margin
• Process and IT harmonization increase of
• Procurement ~500bps
by 2020
Impact on
SG&A RATIO SG&A ratio:
Improvement of
• Lean headquarters ~300bps
• Lean structures in the field
1) Limits of authority 2) Mid-cycle targets
Bilfinger SE | Company Presentation | January 2019 page 13Portfolio rotation 2019 and 2020
Further margin enhancement while keeping a sound balance sheet
Funding sources: Re-Investment:
Margin
1. Disposal Other Operations (OOP) ▪ Strengthening
accretion
4 „accretive“ legal entities to be sold growth regions
2. Potential disposal of selected margin- ▪ Strengthening
dilutive units growth industries
▪ M&A criteria:
3. Apleona
▪ EBITA accretive
Vendor‘s Note
one year after
€100m, 10% compound interest p.a.
integration, ROCE
Accrued value 09/2018: €122m
beats WACC two
Preferred Participation Note
years after
Book value 09/2018: €233m
integration
Typical money multiple of owner EQT
would lead to a significant value upside ▪ Immediate start of
Freeing-up comprehensive
Will receive 49% of sales proceeds
funds integration
(after repayment of debt) at exit
Bilfinger SE | Company Presentation | January 2019 page 14Targets 2020 and Wrap-up
Bilfinger 2020 – Company passes three phases
Stabilization phase completed
Value
Stabilization
Build up Build out
• Strategy defined • Top line growth resumed • Process and System
• Organization announced • First successes in new growth areas harmonization fully rolled out
• Execution master plan •
New organization in full swing • Performance culture
• Top Management Team • Consistent project management established
• Dividend proposed process established • Productivity wheel in full swing
• B TOP rolled out • Net Profit break-even • Complexity significantly
• LOA Process rolled out • Adj. FCF positive latest in FY 2018 reduced
• SAP roll-ins commenced • Share buyback completed
• CRM implementation started • Successfully refinanced Financial ambition reached
• Cash focus in
incentive system increased
• Operating performance improved
Time
Bilfinger SE | Company Presentation | January 2019 page 16Benefit from 49% of the value creation at Apleona
Vendor‘s Note: €100m, 10% compound interest p.a. upon maturity (book value 09/2018: €114m)
Preferred participation note (PPN):
• No management involvement
• Certain information rights, some further rights
• Investment: €195m
• Book value 09/2018: €233m
• Measured at Fair Value through Profit & Loss
Will receive 49% of sales proceeds (after repayment of debt) at exit
Typical money multiple of owner EQT would lead to a significant value upside
Bilfinger SE | Company Presentation | January 2019 page 17Bilfinger 2020
Financial ambition
Organic Growth Profit Cash Return
• Positive adj. FCF from
• EBITA adjusted ~5% Post-tax
2018 onwards
• Gross margin ROCE reported:
>5% CAGR • Over the cycle, from 2018
improvement by ~200bps 8 to 10%
based on revenue FY 2017 onwards: Cash Conversion
• SG&A ratio reduction by
Rate ~ 1 (minus growth
~300bps
adjustment)1
Capital Structure Investment Grade (mid-term perspective)
Sustainable dividend stream going forward
Dividend Policy
Policy: 40 to 60% of adjusted net profit
1 Cash Conversion Definition: (Adj. EBITA + Depreciation – Change NWC - Net CAPEX) / Adj. EBITA
Bilfinger SE | Company Presentation | January 2019 page 18BACKUP Quarterly Statement Q3 and Guidance FY 2018
Q3 2018
Stable Quarter, favorable business environment
Growth in orders received against strong prior year
Book-to-bill >1
Revenue growth on track
EBITA adjusted slightly higher, margin on prior-year level
Net profit improved
Free and operating cash flow above prior year
Outlook 2018 confirmed
Bilfinger SE | Company Presentation | January 2019 page 20Current market situation and trends E&T
Oil & Gas
• Continuing brownfield investments in Europe, greenfield investments
developing in gas
• Increasing up- and mid-stream activities in US Shale, in particular for cryo-
driven gas strippers
Chemicals & Petrochem
• Brownfield investments in Europe
• Growth in US chemical industry
• Middle East with continued focus on plants to maintain downstream value-add
within the region
Energy & Utilities
• Growth perspective especially in European nuclear
• Growing demand on regulatory emissions reduction (in particular IMO)
Pharma and Biopharma
• Ongoing strong demand in Europe
• Increasing interest from Emerging Markets
Bilfinger SE | Company Presentation | January 2019 page 21Current market situation and trends MMO
Oil & Gas
• Steady demand for maintenance services,
but competition remains strong
• In the North Sea, early signs for reinvestments in exploration
Chemicals & Petrochem
• Stable demand in Europe and Middle East for
maintenance and modifications, evaluation of contracting-out opportunities
• Turnarounds scheduled for 2019 and already 2020
Energy & Utilities
• First steps towards contracting-out of maintenance and operations in Europe
• Shift from conventional to alternative energy in Middle East
Metallurgy
• Ongoing strong demand in Aluminum
• Signs of recovery in steel industry
Bilfinger SE | Company Presentation | January 2019 page 22Continued positive momentum in orders received
Book-to-bill >1
Development of orders received
+5%/+6%
• Orders received:
1,054 1,085 1,101 1,139 1,105 5% above strong prior year (org.:
696 670 +6%), especially positive in E&T
825 819 786
Orders (61%) (61%)
(78%) (75%) (76%) • Share of orders > €5 million once
received
(€ million) again on high level
266 315 443 435
229
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18
• Book-to-bill: 1.1
< €5 million Δ compared with • Order backlog:
x/x organic
> €5 million previous year +12% above prior year
(org.: +13%)
Book-to-
bill ratio 1.1 1.0 1.2 1.1 1.1
Order 2,536 2,531 2,689
backlog
2,767 2,828
(€ million)
Bilfinger SE | Company Presentation | January 2019 page 23Again organic growth in revenue, EBITA margin adj. on prior-year level
Development of revenue and profitability
• Revenue:
+5%/+8% Increase of +5% (org. +8%) as a
1,001 1,082 1,058 1,052 result of increased orders
2.1% 3.7% 929
Revenue 2.1% received
(€ million)
• EBITA adj.:
1.1%
-0.6% Slight increase against prior year
(which was marked by positive
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 one-off effect in E&T), margin on
Δ compared with prior-year level
EBITA adj. x/x organic
previous year
margin (%) • Special items:
Decrease in burdens from
EBITA adj.
21 40 -6 12 22 special items: €11 million
(€ million)
compared to €26 million in prior
EBITA year
(€ million) -6 2 -11 -1 11
Bilfinger SE | Company Presentation | January 2019 page 24SG&A ratio continues to move towards target level of 7.5%
Expenses unchanged at ~€90m despite start-up costs for Digitalization and Business
Development
Adjusted gross profit (€ million) Adjusted selling and administrative expenses (€ million)
101 100
95
(10.1%) (9.5%)
(9.0%)
0 0 10 11
0 5
-96 -103 -96
101 95 100 (-9.6%) (-9.7%) (-9.0%)
(10.1%) (9.0%) (9.5%)
-86 -92 -91
(-8.6%) (-8.7%) (-8.6%)
Q3/17 Q2/18 Q3/18 Q3/17 Q2/18 Q3/18
Bilfinger SE | Company Presentation | January 2019 page 25E&T: strong orders received as basis for further growth
Development of revenue and profitability
• Orders received:
+10%/+10% Strong quarter: +64% (org. +63%)
compared to low prior-year figure,
281 308 299 309 book-to-bill 1.5
Revenue 3.6% 265
a.o. due to various contract awards
(€ million)
for ship scrubbers
5.0%
0.2% 2.6% • Order backlog:
1.2% €1,013 million, i.e. increase of +29%
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18
• Revenue:
EBITA adj. margin (%) Δ compared with
x/x organic Increased by +10% (org. +10%) on
Revenue (€ million) previous year
the basis of higher orders received
• EBITA adjusted:
Book-to-
1.0 0.9 1.1 1.3 1.5 Normalization at still low level, prior-
bill ratio
year figure positively impacted by
approved claims
EBITA
adj. 10 15 1 7 4
(€ million)
Bilfinger SE | Company Presentation | January 2019 page 26MMO: EBITA margin adj. improved significantly
Development of revenue and profitability
+7%/+8% • Orders received:
Decrease as expected
664 716 708 712
625 -16% (org. -15%) compared to
Revenue 5.2%
prior-year figure, which was
(€ million)
5.2% 2.6% impacted by catch-up effects and
4.4%
entry of new framework contracts
2.1%
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 • Order backlog:
€1,691 million, i.e. increase of +3%
EBITA adj. margin (%) Δ compared with
organic • Revenue:
Revenue (€ million) previous year x/x
Growth by +7% (org. +8%)
• EBITA margin adjusted:
Book-to-
1.1 1.0 1.2 1.0 0.9 Significant increase
bill ratio
EBITA
adj. 29 35 13 19 37
(€ million)
Bilfinger SE | Company Presentation | January 2019 page 27OOP1): Focus on disposal of "Accretive" entities
Revenue OOP (€ million)
• Progress M&A track:
71 Dilutive: originally 13 units, meanwhile all have been sold or terminated
Accretive: four entities, thereof two in sales processes
accretive
47 45
dilutive
• Business development:
Orders received with positive development (+6%, org. +29%)
44 Revenue declining by -37% mainly due to sale of “dilutive” entities
24 (org. -2%)
1 EBITA adj. slightly improved from -€2 to break-even
Q3/17 Q3/18
Orders
received
55 58
(€ million)
EBITA
adj.
(€ million) -2 0
1) Part of Reconcilliation Group
Bilfinger SE | Company Presentation | January 2019 page 28Operating cash flow positive, net profit improved
Adjusted operating cash flow1 (€ million) Adjusted
Net profit (€ million) net profit (€ million)
13 13
17 -1
Adjust- 11
26
ments 9
2
Reported -9
Q3/17 Q3/18 -21 Q3/17 Q3/18
Q3/17 Q3/18
1 Adjustments correspond to EBITA adjustments, partial time offset in cash flow
Net Trade Assets (€ million) Net cash (€ million)
16 11 -9
-17
0
542 589 619 -29
82 68 84 87
68 67 -9 0
-37
Net Capex
cash flow
Sep 30
Jul 1
OCF adjusted
Financing
Other
operations
Adjustments
Acquisitions/
disposals
Cash flow
discontinued
Sep 30, Jun 30, Sep 30, Sep 30, Jun 30, Sep 30,
2017 2018 2018 2017 2018 2018
Net Trade Assets (€ million) DSO (days) DPO (days)
DSO: Trade receivables + WIP - advance payments received, DPO: Trade payables
Bilfinger SE | Company Presentation | January 2019 page 29Outlook 2018 confirmed
in € million FY 2017 Expected FY 2018
Organic growth in the mid single-digit percentage
Orders Received 4,0551)
range
Revenue 4,044 Organically stable to slightly growing
Significant increase to mid-to-higher double-digit-
EBITA adjusted 3
million € amount, i.e. range of €50 to €75 million
1) As reported, based on output volume/ comparable based on revenue: €4,079 million
Bilfinger SE | Company Presentation | January 2019 page 30The Bilfinger Investment Case:
Turnaround case based on favorable business model
Structural demand for industrial Favorable business Financial soundness
services characteristics
• BB / stable outlook
• >60% of output in recurring • 35% equity ratio (as of Sep 30,
• Increasing # of Industrial plants
• Increasing total service market and business 2018)
contracted out market • No material dependency from • Financial participation in Apleona
• Rising age and complexity single clients or regions with significant upside potential
• Customers demand for greater efficiency • Growing regional diversification • Financial policy: Ambition (mid-term
• Service bundling perspective) Investment Grade
• Stricter environmental standards
Shareholder-friendly
Good starting position: Asset light business distribution*
• Consistently No. 1 supplier of industrial • Capex: 1.5 – 2.0% of output • From FY 2016 onwards:
services for the process industry in Europe volume €1.00 dividend floor
• Clearly defined strategy • Balanced net working capital • Sustainable dividend stream going
• Organization derived from strategy profile forward:
• Detailed implementation plan 40 to 60% of adjusted net profit
• Growth and profitability targets • Share buyback program of up to
• Growth will be supported by additional €150m started in Sep 2017 and
business development and digitalization completed in Oct 2018
activities * Based on current expectations and execution of presented strategy as well as on economic outlook at the time.
Bilfinger SE | Company Presentation | January 2019 page 31Disclaimer
This presentation has been produced for support of oral information purposes only and contains forward-
looking statements which involve risks and uncertainties. Forward-looking statements are statements that are
not historical facts, including statements about our beliefs and expectations. Such statements made within this
document are based on plans, estimates and projections as they are currently available to Bilfinger SE.
Forward-looking statements are therefore valid only as of the date they are made, and we undertake no
obligation to update publicly any of them in light of new information or future events. Apart from this, a number
of important factors could therefore cause actual results to differ materially from those contained in any forward-
looking statement. Such factors include the conditions in worldwide financial markets as well as the factors that
derive from any change in worldwide economic development.
This document does not constitute any form of offer or invitation to subscribe for or purchase any securities. In
addition, the shares of Bilfinger SE have not been registered under United States Securities Law and may not
be offered, sold or delivered within the United States or to U.S. persons absent registration under or an
applicable exemption from the registration requirements of the United States Securities Law.
Bilfinger SE | Company Presentation | January 2019 page 32You can also read
