Bilfinger SE (GBF) Earnings Call Transcript & Summary

Ladies and gentlemen, a warm welcome to Bilfinger Capital Markets Day 2023. Welcome to you, people outside watching us via stream, but especially to all of you being with us today here in Frankfurt. Good to see you in person again. My name is Bettina Schneider, and I'm here together with our Group CEO, Thomas Schulz; and our CFO, Matti Jakel. Safety first, in the case of emergency, please follow the green lights to the emergency exit in the back to the right and here to the left. We will now start with the financial figures of 2022. You will have several opportunities to post your questions. And with this, I hand over to Thomas.

Thank you very much. A warm welcome from myself, too, especially here to the auditorium as well as to our guests online, and a very special hello to all our colleagues around the world where we know they watch that webcast, too. So the year 2022, when we look into, we delivered that what we promised on the outlook for 2022. We said that we will have a significant increase in the revenue, and we delivered that from 3.7% to 4.3%. It shows the attractiveness of our business and especially our business model in the market. EBITA, EUR 121 million we had in '21. And we had, with the efficiency program, a reduction in the fourth quarter of roughly EUR 62 million. That gave us EUR 75 million for the full year. If we look into the free cash flow, we promised to be on the same level. We actually outperformed the level of 2021 with EUR 136 million. The highlights of the year are: we have a growth -- an organic growth in the order intake of 14%. We have an organic growth in the revenue of 14%. Our EBITA margin adjusted, and we do that for transparency reasons and like-for-like check, where Matti will go more into the detail where it comes from is 3.2%. We have, in all countries, all technologies, all industries, a positive market momentum. There was not one area which was not growing and having a positive outlook in 2022. And in that, we have to say that we were a more negative up to October in that area, most likely very much influenced about all the discussion of upcoming recession and so on, but the fourth quarter didn't show that. And in the capital markets strategy explanation, we will explain where that comes from for Bilfinger. We have a free cash flow, which is quite an increase of EUR 136 million, which makes us actually quite happy because it's a very good indicator for management capabilities, and we proposed a dividend of EUR 1.30 per share. The efficiency program, what we announced, we have a lot of attention, I have to say, in the capital markets, is on track and well under the way to be finalized at the end of this year. The outlook for next year in that market with that what we do with the company, what we come to with the strategy review is EUR 4.3 billion to EUR 4.6 billion for 2023 in the revenue and 3.8% to 4.1% in the EBITA. Important in our business, important in the so-called being of Bilfinger in the market is the ESG target set. And we, as Bilfinger, if we sell what we do, efficiency and sustainability, we have to be efficient and sustainable too. On the left side, you see the GHG targets at Scope 1 to Scope 3, what we now report on up to Scope 3. And you see not only an absolute in Scope 2 and Scope 3 or especially in Scope 2, that we actually reduced the CO2 equivalents quite significant despite having a 14% revenue increase. On the right side, it's about safety, which is an unbelievable important indicator for our capabilities within the industries where we act. The trend, what we see here, is not positive. We move away from slightly from the 0 target. We do a lot and in '23, too, to get that trend back towards the 0. In comparison to the industry, we are actually quite leading in safety, and a lot of clients are trusting us a lot that we help them to improve their figures. Out of that, the orders. If you look on the movement, what we have from EUR 4 billion to EUR 4.6 billion, with a 14% organic growth is quite significant. And it follows a typical pattern what we have, roughly 2/3 in service and frame contracts, very normally longer time in the -- how the contracts are looking like and then roughly 1/3 in projects. Our order backlog grew quite significantly and we have a very healthy book-to-bill with 1.07. On the right side, you see the revenue. And the revenue, the same as the order intake, grew 14% and more or less the same ratio between the service contracts as well as the projects with 2/3, 2/3. And with that, I give to our group CFO, Matti.

Yes. Thomas, thank you very much. Warm welcome here in Frankfurt and on the stream. This is a great turnout here and on the stream, so thank you very much for taking the time to join us today and listening to us. I think we have an interesting program not just on Q4, more importantly, on the strategy. And as you had the chance to visit our booth upstairs, give you a little bit of a flavor what Bilfinger is really all about. Just to shed some light on the fourth quarter. I call this tailwind. 21% organic growth in orders received, 20% organic growth in revenues. If we think back about 3, 4 months, everybody was talking about recession and it was recession and recession and it was nothing else but recession. That really subsided in November and then in December and more so in January as we have seen in all the publications in the newspapers. We were carried through the end of the year on those growth rates. Gross profit increased to EUR 121 million. EBITA margin adjusted. And I'll come to why are we also showing adjusted in a moment, 4.3%. Good cash flow above prior year of EUR 124 million. And last but not least, interestingly, the SG&A ratio, which we have reported for the last couple of years very intensively for the first time, below 7%, 6.6% on a high turnover. Looking at the quarterly development of our revenue, you see that Q4 2022 has been the strongest quarter of the last 8 and even compared to last year, a 20% growth rate. All segments, all businesses, our technologies, all the way through, growth rates, growth rates and growth rates. So that in the end, EUR 4.3 billion, a total of 14% so the growth has increased over the year. Looking at gross profit, EUR 121 million in the fourth quarter compared to EUR 107 million in the last year for a total of EUR 437 million, quite a nice increase over the EUR 387 million in 2021. SG&A, as I alluded to before, 6.6% in the last quarter compared to 7.8% in Q4 2021, so for a total of 7.1% over year. You see the cost did increase EUR 307 million to EUR 291 million, but that's only a 5.5% increase compared to revenue growth of 14%, which took the percentage down. Briefly on the EBITA, and here is why we -- one reason why we also show adjusted. In 2021, as you can see, we had adjustments all the way through the 4 quarters. In 2022, EUR 10 million, that was the adjustment, the provision that we took on exiting Ukraine and Russia. While we stayed in Ukraine, we completely exited our Russian business by the end of 2022, which is driven and has been driven by increase in sanctions. It made us impossible for us to stay in the country and continue to work. Then through quarters 2 and 3, no adjustments. Then we decided on the necessity and the implementation of the efficiency program, and we took a provision of EUR 62 million in the fourth quarter. And you see here that adjustment did hit in the fourth quarter. So for the total year, reported EBITA EUR 75 million, 1.8% but EUR 65 million in total for adjustments. That's the efficiency program on the...

Gain, the capital gain. Yes.

Yes. And we had a capital gain on selling a business that had to be reversed, yes. So that is -- that also went into the adjustments. For EUR 140 million, 3.2% in 2022. On the efficiency program that was announced in November, we also had the investor lunch in December. The program in itself has been confirmed. We look at a capacity reduction of about 750 workplaces with a savings potential of EUR 55 million annually starting in 2024. Out of that EUR 55 million, we will reinvest into education and training of our employees, 25% of the EUR 55 million. So we're looking at a net improvement of around 1 percentage point on revenue. Onetime cost of EUR 62 million has been included in the financial year 2022. We're making good progress on designing the adjustments to the organizational structure, and we come to this in the strategy part of this. We're looking at further savings in procurement, and you will see the first improvements of the run rate should be visible in our P&L, starting with the second quarter of 2023. Now this is a busy slide and I know that, but I felt it was important to go into a little bit more detail here, demonstrating why we are also reporting adjusted figures. Starting off on the left-hand side on the bottom chart, EUR 137 million in adjusted EBITA, special items of EUR 16 million, EUR 121 million, then the financial result positive impacted by tax credits or interest on tax credits and the write-up on Apleona for an EBIT of EUR 115 million. We had huge tax credits in 2021 from the years 2005 to 2009, hence a positive tax number here for an earnings after tax of EUR 123 million. Then here, again, a positive impact, EUR 7 million in the discontinued business also has to do with the Apleona deal. And then on minorities, not much. So EBITA adjusted translated into a net profit of EUR 130 million because of those positive effects. Looking at 2022, I would say more of a normal year and a normal development, except for the special items, mainly the efficiency program with a EUR 62 million taking the EBITA adjusted down to EUR 75 million, a normal financial result of minus EUR 24 million gives you an EBITA of EUR 52 million. And then a higher-than-usual tax rate because we're not capitalizing tax losses carryforwards in certain countries, taking off EUR 20 million for earnings after tax from continued business of EUR 31 million and then minus EUR 3 million for the minorities for the net profit of EUR 28 million. So if we look at 2021 and 2022, you see very different developments. And hence, that's the reason why we're also showing adjusted figures for 2022. Cash flow, good operational improvement, quite a bit of an increase. You may remember that in the free cash flow of last year, we had positive contributions from sale of real estate and taxes. So if we compare the EUR 115 million to the EUR 136 million, there is even more operational improvement included in the EUR 136 million that you would see on first phase. I think that should be it for the numbers on quarter 4 and the full year. And as I said earlier, there was a lot of tailwind that carried us through to year-end and also into 2023 and how that is going to carry forward. That's up to Thomas.

Thank you, Matti. So the market for 2023. And of course, we only give a glimpse here on it because in the following strategy presentation is a lot of information about the market and where we act in. But a very short view on energy, the energy transition, the volatility in energy prices drives our customers quite a lot in improving efficiency and the longer-term sustainability. That market is great. Volatility in supply cost and production cost for our customers, always means good business for Bilfinger. Why? Because we can help them to reduce it. We can help to produce more with less. That is our specialty. Another part in it is the revival of nuclear power, what we see as a green energy resource. We are in the demobilization in Germany, and we are involved in the building of nuclear power plants outside Germany. We are leading in helping, supporting customers to deal with nuclear waste, no matter if it's fresh waste or very old waste like the mine site, Asse, in Germany. The other big business vertical industry where we are in is chemical and petrochem. The customers have quite a fluctuation and volatility on the resource cost, raw material. They have quite a fluctuation on the energy. And at the same time, they have to keep their prices, their products competitive in a global environment, which is tougher than 20 years ago, which is tougher than 10 years ago. That volatility is a big, big need and demand to help to support them to get that production part stable and actually that they can forecast it, what the cost is. And here we are as a Bilfinger company in the key, in the core of the industry to help them. The other part is pharma, biopharma. Pharma, biopharma enjoys a deglobalization. No matter that for a lot of people, myself included, deglobalization doesn't sound that nice. In pharma, biopharma, it's very nice because it means that the idea that we have one or 2 global big production sites to serve the whole world with vaccine or pills or anything else is gone. Based on corona, they localize, and localization means fast buildup of smaller plants, what we call modular plants, you have examples here, and we are leading in that container-based fast buildup of highly efficient, sustainable biopharma and pharma plants with Bilfinger support is possible. Then we have Oil & Gas, and Oil & Gas, there was a lot of negative talk about and still maybe it is. But the facts are the industry didn't invest a lot in the last few years, most like in the last 10 years. And now it's the time to invest to get the assets which are partly a little bit worn down, back on track, especially in 2023 as long as the oil and gas boom is ongoing. And these customers all have net zero targets too. They invest heavily into carbon capture. They invest heavily into biofuels, hydrogen and so on. No matter that the market in itself is still small, but this is a big market area in the future. And it's one of the products, what Europe will be able to sell worldwide in 10, 20 years to come. So the outlook for 2023 from our point of view is positive. But of course, we won't have the coming out of the corona crisis. So from a growth rate, we have to be more, let's say, humble in it. If we then look into the outlook, the forecast that we gave, we gave a forecast up to EUR 4.6 billion in revenue, a 3.8% to a 4.1% EBITA, which brings us, of course, a step closer to the promised target in 2024 to be above 5% EBITA and the free cash flow of EUR 50 million to EUR 80 million, which is, of course, impacted by the outflow of the more than EUR 60 million this year.

Good start to the first question and answer. We have the possibility for you outside via stream to post your questions through the chat and I will read it out loud. Alternatively, of course, for our guests here in the room, please give me a hand sign and you have microphones in front of you. Is there any question to financial year '22 and outlook '23? Strategy, we would do after the strategy session. Too early for questions? No. We see one. Mr. Kuglitsch?

Maybe you could just -- thank you for the presentation so far. But could you just maybe give us a sense how much of the cost saving benefit is already in this year's number in '23? So how much are you already baking in you crystallize this year? And then maybe the second question is obviously a wide range on revenues. I think your book-to-bill was 1.07 , a really strong Q4. The lower end of the guidance kind of implies no revenue growth. So the question is, is that just being cautious? Or is there something going on that we should be aware of why you would be that low on the low end?

Are you taking the...

I'll take the first question. Yes. We announced the program very late last year in November to the cost efficiency program. So we're still going through the design phase and the implementation of the measures will happen in the second quarter of 2023. So we see quite a steep increase of the run rate towards year-end. There will be some cost savings that will hit the bottom line in 2023. But it's a bit too early to be more specific. We will report on progress every quarter, first time in quarter 2, and then we can be more specific on how much of the cost saving will already hit the P&L 2023.

Exactly. And then if it comes to the outlook for the revenue, yes, we have a low point, which is more or less a site move, but that has to do with the volatility, what we see in the market. It has nothing to do with the building. It's actually the look and the forecasting how the global industry and the global market is developing, especially North America, Europe and Middle East. And the high end is what we see in the market if it goes on to develop as we had it, for example, in December.

Okay. Is there another question explicitly on the financial year '22 or '23? Not as of now. So I would suggest, let's start with the more interesting part, going to the strategy.

Yes. Let's make a 20-minutes break or the movie comes?

Yes, exactly.

Exactly.

We will start now with a movie and then move into the presentations again.

Yes.[Presentation]

So now we start with the strategy explanation and going very much into details. But before we go into that slide show with all the information and guiding you through what we will transform the company into, I would like to start with that. I started in March last year as the CEO, coming from an industry or from industries by far more volatile than Bilfinger is, believe me that and by far more exposed to more difficult markets than we as Bilfinger are. What I found is a company with a significant upside potential in supporting customers, in helping them to actually earn more money and to help them, to move them closer and on the net zero target set. And I found a company with more than 30,000 highly competent, motivated people in North America, in the Middle East, in Europe and some other parts that we still have on the list. And I found a customer group who is demanding more from us. And I can be quite transparent here, the first 20 customer meetings I had, there was only one who had one negative sentence in it. All others asked for more, faster, organize and please help us more, Thomas, wherever we go in the world. That's the world of Bilfinger. But the world of Bilfinger is, too, that we lack a little bit self-confidence whyever. And that we are maybe playing from time to time in fields where we should not play because they are not highly profitable or profitable at all or too risky or anything else. That all came fairly quick like, yes, quite a sledgehammer on me in it. But, and that's the but. I was never alone and we started immediately to work on to look into how to make a strategy. And we announced that we had, in July already, the so-called Team 12, actually more than 12 people to -- internal people to look into how to build the future for the company, where to place the company in the future, where to go with all the more than 30,000 people to have our space at the core of the industries. And then based on that, yes, we implemented a top management, a functional organization from the top group executive management, where HR, procurement, products, innovation, the segments, finance and so on are reflected, 8 people when we are in one room, the whole company and all the customers are reflected because I'm a big fan and thanks got Matti to. of simple, less management-level team approach in the business. That is what we run for. And I'm very happy that as the newcomer, the new kid on the block, having a CFO with me with more than 30 years' experience in that company. So when we look into what we will do with our company is actually nothing really new in total. It's the next step of development. We will put Bilfinger as the #1 in industrial services to help and support customers, to enhance them, to earn more money by improving their efficiency and their sustainability. And the market for that is unbelievably big and the competence what we have is huge and gets further developed. But in the first direction, we have to get our operational excellence under control and done. Efficiency program is the first step. We announced it in November. It will be finalized in December, and we will deliver more than 5% EBITA in 2024. And then we go on with standardization, bundling and so on. The other part, which is really new in that strategy is that we place us in the efficiency and sustainability corner. Whatever is not supporting that will exit the company. If we then look into the financial targets, we will grow 4% to 5% in average per annum for the midterm, and midterm is 3 to 5 years. Why not more specific? In volatile times where corona came out of nothing, where Ukraine war came out of nothing, we had some presidents in North America making some issues, too, and so on. It is actually not really fair to go on 5 or 10 years specific and to say what will happen. The likelihood is then too low. But here, with the midterm, 3 to 5 years, we built a bottom-up to show how we achieved that. And you can measure us because it will be transparent, and it will be over communicating into the market. Our EBITA margin will increase in 2024 to 5%-plus as we call it, and the years after to 6% to 7%. And you will see how we will build up and the cash, which is so important for us, not only as a financial figure, actually as a figure to drive performance in the company, will be with a cash conversion of more than 70% in 2024 and more than 80% in the years to come afterwards. So what's the growth? The 4% to 5%. We see in the market where we work in a growth rate of around 2% for the next 3 to 5 years. But we have as Bilfinger what we call a self-propelled growth and the self-propelled growth is easy to describe. If we start to sell all the profitable products what we have into the existing markets, what we already have, this is self-propelled growth. And we have customers demanding that from us. It is not so that we have to knock on that would you like to take. They ask us, you do that here in that village anywhere in Germany. Why are you not doing it in U.S. with that, too? Because it would make our life as a customer of you significantly easier. We can do that. And then in the next phase, we can look to go with these clients maybe out of the territory where we are acting in. But at first, we deliver that what we said with the more than 5%. On top of it is M&A and one word to M&A. We are interested to strengthen the core of Bilfinger. We are interested, only interested in investing there, which is supporting us in our strategy. We are not interested to go into new endeavors, not from a geography, not from a technology point of view. We are in the core of the industry and we can gain more. There's a lot of more business to go, and that is where we will strengthen ourselves. Today, Matti and myself will guide you through the overall strategy. Then our 3 segment heads, Juergen, Christian and Thorsten will go into their segment strategy, and you will recognize, it is a sub-strategy of the overall. And you will recognize there are KPIs, time lines, clear figures, what we do, where we go, how we achieve that. And why is that the case? We do that, that you actually help us. And you help us in one thing because if you look into the KPIs, how we perform, you make actually our organization aware that each and everyone who's working in Bilfinger is contributing to that result. Internal communication, the best is you have a good external communication. That's the transparency. So be aware, there are quite a lot of KPIs. There are quite a lot of targets in the different action points, what we call lever. And these colleagues will guide you through with a lot of examples what we already do because a lot of that what we say, we already do, not everywhere. Maybe not that well organized as it should be but that's a strategy for. If we then look into the new normal, sit in a chair of a CEO today. Take any chemical company sitting anywhere in Germany as an example. And compare that with 30 years ago, in between the financial crisis, immigration crisis, Euro crisis, Greek crisis, Mr. Trump, Mr. Jinping, I can go on for hours, which kind of high volatility and impact on the business happens. But overall, it's deglobalization, it's overpopulation, overregulation, climate change, the education gap, lack of skilled workers. Yes, it is all over,[ You end ]there is no break. You know it yourself. You come home, you open the newspaper or actually your iPad, and you get the same message what you have in the job. This is where our customers are sitting in. And what is that asking for? Making your own life easier in the business because with that high volatility, you still get people like you and our investors, maybe myself asking for a good forecast that you fulfill it. Everything is volatile but you should hit a number. So what are you doing? You do -- you go out and ask for help, outsourcing, make or buy, partnering up, solution partner. Please, Thomas, pick that, come here to Rotterdam, take that and just do it and give me each year an improvement and show me that we get more sustainable so that my overall target for the group, what I have, is fulfilled because I said I will be net zero in 2050. And I don't know how to do that without having a good maintenance turnaround, consultancy engineering business from you guys. The world for Bilfinger, our world, my world, Matti's world, all the world of the colleagues is this, investments like health, government, the state of Hesse where that beautiful Frankfurt is in, is having targets for net zero and climate change and would like to invest. Companies are doing it. This is a huge field. And do you really think it will end in 5 years? Never ever. This will go on for decades until we achieve that what we want to achieve. And the important part is, yes, it is important to go into new technologies, but it's, at the same time, more important for the next few years to improve the assets what we have because all the people are working there and they need income and there is where we have the CO2 production. And we, as Bilfinger are sitting in. We sit on the sites, Its we have the knowledge, the competence, the digital, the people, we have it. Yes, we have to organize a little bit more standardized and more easy to read, not only for you, for customers, too. But the field is great. Let us look into the market. You judge us on verticals. Whyever? The 4 verticals: energy, oil and gas are here, a lot -- actually more outside than internal, pharma, biopharma, chemicals. This is the addressable market of Bilfinger. In energy, more than EUR 60 billion; in chemicals, more than EUR 30 billion; in biopharma, pharma, more than EUR 20 billion; in Oil & Gas, more than EUR 20 billion. And the growth rates you have on it. And then we have that what we call [ Awas ]. I will come to that, what [ awas ] means, [ awas ] means[ ketchup ], [ diaper ], whatever. You will be actually quite surprised where we all work on. So that growth rate of that market is 2% for the next 3 to 5 years as we calculate as an addressable market, a market where we can act in, in North America, Europe and Middle East, not Australia, not Latin America, not China, not India because that's not our market. If we then look into that special niche in the market, where especially in Germany, the whole world is always talking about it, the green technology, no matter if it's hydrogen, battery plants, biofuels, carbon capture, you have examples on it where we already work on it. This is not new for us. This is absolutely not new for us. But we are in and we are in with project business because there is no maintenance business yet because the plants are get to build. And if you don't have a plant, that's no maintenance. So we are in that business with the project, and that is what we will do in the future, too. Why? This is one of the main products what Europe will sell in the world in the decades to come. That is where we are leading. That is where everyone in the world is talking about. And I know definitely what I talk about because my old career, I did actually in most of the part of the world, except Europe. And they know that Europe is green, and they know that Europe is on sustainability, and they know to look into Europe to make that happen. And that's the reason why a country like India with 1.4 billion people has a green deal with Denmark with 5.5 million people. Nice greetings to my Danish colleagues. So out of that, what is it what we really work on? It's the horizontal market because it doesn't matter which industry. If you have pipes, if you move gas and liquid and it's complex, it's us. If you have high energy cost, it's us. If you have complex work with thousands of pumps and electricity and a lot of people around where you need education, it's us, it's Bilfinger. That's a horizontal market. 80% of that, what we do in all the industries is similar, which means I can move, we can move our people from one industry to another if one industry goes down. But that is not happening because if an industry goes down, they call us to help us to get down with the capacity because these assets are billions of value. And no one comes on the idea to say, I shut them down. You saw that when the gas from Russia was gone. And everyone said, oh, then we take gas from Northern America. You know that each gas is related with the deposit. It has a different chemical setup so you have to treat it differently. Who did they call to make it happen that you can take gas from Northern Africa? Bilfinger. That's exactly what we work. That is the vertical. 80% is equally similar between the industries. 20% is domain knowledge. If we weld on pipes in nuclear, then you need specialists for nuclear welding. That is what we have to. If you build biopharma and pharma, you need specialists out of our Salzburg office, to make that happen, and they do that very well. That's the domain knowledge. And that domain knowledge, we have to be able to offer to each client in North America, Europe and Middle East. And other companies are doing that for decades over product centers, and we will do so, too. That's functional organization. That's the efficiency program. Nothing else. There's a clear plan how we realize it in steps where we deliver, where we have milestones so that we engage the people and make them accountable and getting the self-confidence up. If we then look on that slide, you see on the left side, the frame and service part, which is the recurring, low-risk, actually quite profitable business, what we really love and the project business. We will decrease the project business from roughly 1/3 below 20% in the future. And we will do projects, as I said, for the green technology and where long-term customers with a potential for maintenance, for engineering consulting work afterwards to help there with their investments. And that is where we are really great in it already today. That's our world. Our world goes from consultancy to help customers to come onsite and to tell them how good their site is. Not everyone likes that what we say. I have to say that, to engineering, modification, maintenance supported heavily by digital products and there we are on the innovation. We, as Bilfinger, don't need to develop rocket science. We utilize startups, universities, well-established high-tech companies and combine it to a product what we need for our clients. We have an example with NDT, drone-based on the upper floor here. Watch, each thing is an own innovation from a company. And we as Bilfinger combined to offer it to the clients, and they are more than happy about it. If we then go on, so what do we offer? The value chain you got. We are more than 30,000 people in 27 countries. More than 90% of our customers are buying more and purchasing more than once from us, which is very nice and very healthy, a stable business. We are organized in 3 segments, and we are roughly 70% -- actually,[ lastly ] a little bit less, Juergen, not 70%, 67% in Europe and then the [indiscernible] is equally around, which shows we have huge potential in North America and Middle East because they boom and the colleagues will tell you why they boom and how they boom. If we then look into the customer again, if I would sit on your place, I would think yes, sounds nice, but is really the market ready for that? Yes, the market is ready because customers develop. When I started with my career in the '80s, last century was that, sounds very old. If I -- when I started my career in the '80s, what was important in service? That you knew the customer, that customer knew you and that you had people on site. That's -- and a little bit technical competence. And then it was growing in the technical competence. Then on top of it, digitalization came. And digitalization didn't come 10 years ago. It was already before there. We didn't call it like that. We called it automation. So out of that, we are now in the digital phase. And now with all the volatility, what they have for their production unit, wage increases, resource increase, energy up and down like a roller coaster, and then they have to have a product which is always priced the same, and if possible, competitive to the Chinese and Indians and who else? That is efficiency. They run for improved efficiency, make my back line stable and each year an improvement in costs, that would be great. And the next thing is with the EU taxonomy and the whole world regarding the climate change is the sustainability. They all have net zero targets, all. How to achieve them? The OEM suppliers, the big equipment, where I worked before, quite a long while. They make roughly 60% of the sustainability on the side. Who is taking care of the other 40%? Who is doing that? With thousands of small business here and there, highly complex, not high-tech everywhere, but highly complex. We, we as Bilfinger. We can go out and say, come to us. If you buy one or 2, you can get the full package from us. And when you look to the right side, that is what we do with our company. We are today working in an efficient, a little bit sustainability-related area as you see on the Y X. On the right X, on the X-X, you see single trade. What does it mean? Single-trade means if we compete with a mom-and-pop shops, with all respect in scaffolding. Of course, they are cheaper. Of course, they are sitting around. They have no headquarter. They have no stock market. They have no internal, external communication. Very often, the CEO is the papa and the mama is the CFO. So that's the thing. In all respect, great business, great people. But if you would like to work on efficiency and sustainability, this is not enough to get really a step ahead. For that, you need to combine the business. You have to make, in that case, ISP. Why? Because then you get the advantages regarding sustainability and efficiency. If we can build scaffolding and immediately putting the insulation in, we can be up to 2 months earlier in the energy reduction with that system, what we have, than anyone else. Two months of 2% less energy cost on a big chemical plant, I can tell you, these are -- it's a double-digit million euro figure. And we are not getting a double-digit million euro figure paid for. That's a little bit of a pity. So that's our part where we go in, high profit, high entry barrier. Not a lot can do that. If you play in that area, you have hundreds of competitors. And you know if you have hundreds of competitors, your profit margin is low. We go here and [ awas ] can follow us, and there we are maybe a handful doing that today partly. We have now the area of best offering for it already. So what I'm talking here about is actually that we look into that what we have, a single trade, scaffolding or insulation or painting or consultancy, or, or, or. We have to combine it into an end and at the end, as a together. And that is the multi-trade and then the solution partner, where we have already today clients coming to us and saying, "I don't want to look into that. I really -- I don't know how to deal with it." You take it. We go there, you just take it. The only thing what we have as customized each year, you prove that you go down in the cost. And we make open book policy. We say whatever cost we have, how much money we earn, we can make open and transparent, no problem, that we are because we sit in the same boat. But if you have a higher profit, I get more money. If you don't have a higher profit, we work both on it to make it happen that I get more money. That's the model. Are all the customers asking for that? Not today. But when they come to the net zero target set from a timing, close to it and seeing, we are very far away from it. Then latest, we are really top in it. And we do it already today, solution partners. We have quite a lot of customers doing that, multi-trade. We have a lot we are doing that and single trade, of course. But if someone buys from us a single trade, one product on, they know that we know the other products. And then they know if they make a mistake, we will tell them, I would not do it like that. You should do it like this and that we can help you. That's the competence, and it's not for free. If we then look into our business model, our business model is built that we enable customers to earn more money. That's the business model. And that is the vision of what we have, to be the #1. The #1 is not the most beautiful, intelligent or the biggest in revenue. It's the one where the customer says, "They are the best competent company in efficiency and sustainability improvement". And that is where you earn the most money. And with our step of 6% to 7%, we are in the upper quartile, the upper 20% in that sector in North America, Europe and Middle East from a profitability. When we then go into how to do that, because that was the starting, how to do it, in a strategy, it is important that you have clear action points, transparent and with clear targets set on time on where you have to look, who is doing it, when they are doing it and so on. And we call that strategic levers, and we divide them into 3 pieces: efficiency program, and in that efficiency program, functional organization. The second is operational excellence, standardization, bundling. And the third one is positioning. As I said at the beginning, when we go into markets like North America, where we are not offering a lot of the great products, what we already do with the same clients in Europe, very profitable. That's market expansion on the product offering. This is self-propelled in the growth. So when we look through these different strategic levers, you will see them several times today. Of course, because what we said for the group, the segment managers choose and pick what they need to make their segment into that financial area, what we demand from them and what they are able to deliver. So we track that on what is it I take here and the efficiency broken into functional organization, which will be done and implemented up to the end of this year. It will impact the profitability. Time line is 12 months. You can judge us on it. Competence development, unbelievable important. We have a lack of skilled labor. They talk about schools, and I don't know what they all talk about. We need to educate our own people more. Why? Because they can do it. They are intelligent and they are willing to do so, and it makes us more competitive, more competence, we have significant better in efficiency and sustainability improvement, makes us more attract -- or more attraction towards all, any of our peers. With that competence in the value chain, what we have, great. So we move with that into the position #1. Then procurement, in the new sustainability world, in the scope free, you look to your clients and you look to the back, to the ones who supply to you. When we look -- I'll come later to that with how much we cover of the CO2 with our own company because that's very tiny. If we then look into competence in itself, because that's always an important part, we will invest more than 0.5% of the revenue each year onwards. And it's calculated into the figures what we presented as financial targets, midterm and for '24. On top of that, what we already do. Why? Because it increase our competence. It makes us more attractive. It makes actually more fun with our own people when you see that they grow and they want to have a career, they want to learn. And this is not white collar only. This is actually for building more on the blue collar side. And we have great developments, and others would like to have it, too. And it makes for younger people really fun if you take a German welder and send him to U.K. for education and then on a plant in the Netherlands to work on. This thing I can do then. We can offer them. You see here our colleagues on the roping. This is highly attractive for young people because if they get our education, they actually can go, no, I don't want to have you on the Himalayas, but the Alps would be actually quite nice. That is what we can do. This is competitive advantage to attract good, young people being willing to go out to the industry and to help to make sustainability and efficiency happen. Not sitting on a sofa and having nice speeches, really going out and doing it each day, each second, each minute. We can do that. And of course, we, as an employer of choice, if we are placed there, this is a hell of a good branding and makes us, towards our clients, unbelievably attractive. If we then look into the operational excellence, the next package of levers, there we have standardization and bundling. Standardization is not only product standardization. I'm an absolute fan of standardization. You would not imagine what I standardize in my own life. Standardization is fantastic. It means that you focus on that what is important and not to reinvent a thing what already exists 3, 4 times a day. You take that module and you put modules together, and that is what you work with. As an example, in shared service, as you mentioned it, Matti, if we have shared service, they all work the same because if we then have a labor shortage in shared service location A, I can take people from B and putting them in. That's it. That's standardization. Standardization gives you, as an employee, free time to focus on that what is most important, the customer and to generate profit. You don't need to reinvent a product. They are already standardized, and service products are definitely capable to get standardized. Our team [ to well ] proved it and worked that fantastically through in the last 6 months. Derisking. We want to be in a business which is low on risk. We don't want to go into a business where we don't know what comes out, and then at the end, we don't have any business afterwards and only paying money for it. This is not what we want. Derisking. Matti will talk more about it. Digital innovation. I said it before, we combine high-tech from others into a product for our clients. As we have it with the NDT, the drone and the people upstairs what you can watch. That is, for us, innovation. We don't have an R&D department. No, we look what is needed. We call partners in startups, universities, big technology companies, and then we take the best of them, combine it and make a product out of it. That is competitive. That is highly competitive and predictive maintenance to help customers, to tell them months before a disaster happens that they can still avoid it if they let us on the site and doing the right work. If we then go to positioning. Positioning for us has 3 elements. Market expansion. I talked about that we sell all the products that we have in all existing entities. That alone is a hell of a good self-propelled growth. But as a next step in that market expansion, we would like to go with our clients when they go into what we call adjacent market. If we have a German chemical company, I take now biopharma, a German biopharma company, and they would like to do something in France, why are we not going? Come on, it's only virtual border. I'm from [ Region de la Salle ], I'm half French, not a problem to go over and to make the business. We will do that when we are done with the efficiency program, operational excellence and getting all our products in existing countries sold, then we go into the next step. But that is in the 3- to 5-year scope. Sustainability partner. In the future, you will see -- in 10 years, you will see that clients are actually not asking for, I need scaffolding, insulation or anything. They will ask, I have that CO2 tonnage, equivalent, and you have to help me to get that down because otherwise, I pay tax like hell. There are industries like cement. If the EU CO2 cost is coming through with EUR 130, they will have a problem to have any profit left if they are not dramatically improving their CO2 setup. And that is not in cement, but in all industries, we can help them. We can go in and making their life simpler and showing them an improvement track record over years by utilizing our competence, our products. And we can measure it in CO2. You will see very quick and we already do it partly, not everywhere, not everywhere, on each quotation, what we send is a sustainability part, if the client wants it or not, because they will grow into it. And then when we say, we do that consultancy, it will save you the following energy costs, that means in your energy mix, that reduction in CO2 tonnage. And we can say that money per tonne, what you pay to us is your reduction in CO2. And with that, they will go out and getting a better rating towards their clients and towards their employees and towards their societies where they have the plants in it. We, as Bilfinger, we can do it already today. And the last thing is, if you go out and tell people how to do better in efficiency and sustainability, I think it's clear that you have to be on your own efficient and sustainable. No one would go to a dentist having only black teeth -- maybe, but not myself. That's exactly. You can smile about it, but that's the truth. Customers look into that, how your setup is. If you tell a client, I'm offering your efficiency, and then he has to call 20 people to get 1 answer, do you really think they believe us? Not a second. Internal efficiency is unbelievably important because you create an environment of efficiency and sustainability, what you then put into the business. So what does it mean for us? We committed to the SBTI, science-based target, the commitment to the 1.7 degrees Celsius, and we work on it. And no matter what people say, it doesn't matter if we achieve it or not, we have to work on it with everything what we have, but we have to earn money on it. Otherwise, it will not fly. The second thing is we will have a full GHG reporting in 2025. And then for 2030, carbon neutral, and for 2050, done, net 0. And you will see most likely, these time targets will change in getting shorter. But over the time, you develop and you see what you can do more, as we see it with our clients. On the top of the page, you see 4 of the 17 sustainability development goals. And as you may know, I come out, I was my whole lifetime in chemical, construction and mining. In the former company I worked was mainly in mining, 70%, 80%, and I was actually nominated in '21 as one of the sustainability managers of the year in the most green country in Europe, Denmark. And how? Because the same what we do here, we focus on some areas of the sustainability. If you focus on everything, you don't focus at all. We can contribute and making a real change in 4, 7, 8 and 9. Of course, we do another sustainability goals a lot, too, but this is our focus package. And one part of it is what you see on the right side, the EU taxonomy, which is not that easy to understand, to make it nicely. It's not covering a big part of the industry, surprisingly, and absolutely more or less, I think, less than 0.1% of industrial services where we are actually in all the industry and all sites. So that will not help us to get transparency to you and to drive the performance and development internally. So we classify, as you know it, in A, B, C, D. Where do you know that from in the private life? Refrigerators, heaters, whatever. It's actually a fairly simple classification. And we use that, too. We have today, less than 10%, actually around 5% of the business, which is not showing an efficiency or sustainability improvement that we will exit. It's not about selling big companies. So it's a business down here, not doing that business there. Labor is not there and so on. Then we have roughly 3 quarters of the business in the C class. C class shows, for the client, clear improvement in efficiency, but it's quite a bridge to build to show what really the sustainability is. We will do that. If we do -- coming back to my bill of scaffolding and painting and insulation, if we make a 2% energy reduction, we actually can calculate how much tonnage of CO2 we save for the client. That is then the Class B. And the Class A is the green technology. When we work on hydrogen, carbon capture, biofuels, not LNG, not LNG. But in that area, we invest a lot by doing more and more work because we have a lot of competence, and we will move Bilfinger in that picture. With that business, what you see with 77% in '21 and 73% in '22 towards the A and B class, and the future Bilfinger will be in A and B. That's where we will position the company into. And you see that we already did, in 2022, quite an improvement in that area, and nuclear for us is a green technology, to make that clear because we are in Germany. So out of that, that is the overall what we do with the company. To set it up a little bit again., we have 2 main directions: efficiency program, operational excellence and the new positioning into the efficiency and sustainability. That's the Bilfinger, what you will see in the future. And with that, I give to Matti, our CFO.

Yes. Okay. Thank you, Thomas. Let's take a breather. Global warming, yes? Good. So how does that what Thomas explained to you translate into the financials? A brief recap. Growth rates, what we expect in the midterm, 4% to 5% revenue growth over the next few years. EBITDA margin, 5% plus in 2024 and midterm 6% to 7%. Cash conversion increase 70% 2024 and then 80% as we measure cash conversion, free cash flow divided by EBITA. Looking at the starting point. And if I exclude 2020 as sort of the COVID year, our operating platform is about 3% EBITA. Are we happy with that? Certainly not. If I look at the competencies, at the reputation, at our people, client relationships and so forth, 3% is not where we should be operating. So there is significant profitability potential in what Thomas showed you in terms of better efficiency, operational excellence, positioning. This is how we see that we can develop and improve our EBITA margin. So that's our journey for EBITA progression. The efficiency program will deliver 1 percentage point to the bottom line by the end of 2024. Program initiated this year, implemented 2023, full run rate improvement in 2024, 1 percentage point. Operational excellence, midterm 1 to 2 percentage points. Again, this is something that is on us in our control, that is us to become better and more profitable. And then positioning, another percentage point in the midterm. A little bit more flavor on the details. Standardizing core functions, creating a functional organization, shifting transactional tasks to shared service centers, nothing new, something that's already at work in Bilfinger, but there is more to be had, and I come to this in a moment. Optimizing our IT. We have spent a lot of money in the last few years, which was one of the reasons for adjustments in the past. We have built the foundation for a much more efficient and effective IT. This is something we need to deliver on. Procurement. We have instituted category management, but there is more to be done to drive the maturity level up in supply chain. Also, to make or buy, what do we do ourselves, what are we buying? For example, in IT, we are still performing low-level basic services ourselves. Nobody does this out there. Where you are coming from, standard is you have a service provider. That is what we're looking at to implement in Bilfinger. Have we made progress in the past on SG&A? Sure, we have. From 8% in 2019, pre-COVID, we were at 7.1%, 7% in 2022. That should improve to 6%, and midterm, the expectation is that it's less than 6%. That would put us into the upper quartile of our peers. Why is the efficiency program so important? If you look to the left-hand side, we still have quite a number of, I call them, operational silos. Do we have HR in each of the legal entities? Yes, we do. Is HR performed in a standardized similar way across all our operations? Not yet. That is where we will -- that is where we are working on with the efficiency program to come to a situation where a function, an administrative function, is done the same way no matter where you are in Bilfinger, standardization. You can then move people from place to place. And they still find, okay, here is Bilfinger, I know what to do, I know where to find. Shared services. We do have shared services, quite a professional shared service center in Germany in 2 locations. We have similar organizations in other countries. They're working the same way as the one in Germany? No, not yet. Okay, so let's get it standardized, make sure that we have shared services across all our operations, support them so they can focus on what's important for them, sell and execute. Operational excellence. Very close to my heart, having been in the company for a long time. We can do better. Number one, derisking our contract portfolio. Right now, as you have seen on the numbers for 2022, the revenue share between framework contracts and project contracts is about 2/3 to 1/3. There is so much more work to be had in frame and service contracts that we can allow ourselves to rebalance our portfolio, derisk the portfolio, make it more visible, easier to predict when we go to a percentage that's more in the 80 to 20 area. Why is that important? Look at the frame contracts. They have an average tenure of between 3 and 10 years. A project has a duration of 6 months, 12 months, 15 months, and you need to constantly go out and bid in competition. That's different on the framework contracts. We have a repeat rate of 90% plus. So when we are on an installation, on a site, and we are the incumbent contractor and the contract term comes to an end, in more than 90% of the time, we get the renewal, the renegotiation, the extension, you can call it what you want. It's repeat business year after year after year. The longest tenure with 1 client is 80 years for Bilfinger. And Juergen will show you later on about the relationship that is 50-plus years, on and on and on. Standardization. Uniform product definition drives productivity. That's not a secret. That is what everybody does in a production environment. So why not us? We can do this as well. When we standardize and when we bundle, we have instances where we work on the same site for the same client with 3 different services and 3 different contracts and 3 different types. Does that sound efficient? I don't think so. So bundling the service under 1 contract reduces interfaces for ourselves, for the client, for everybody else, gives us profitability potential. Digitalization. In processes, internally drives performance. We do use quite a bit of robotic process automation. Simple things, very simple things. In Norway, which is a little more advanced than Germany on digitalization, a little more, yes, you have the right and in future, the obligation to send all your invoices in digital format, right? How do we do this? How were we doing this in the past? Well, you produce your invoice in SAP, you print it out or you make a PDF and somebody sends an e-mail. No more. This is routine, mundane task. It's boring. We have a bot working. Once the invoice is created in the system, the bot makes sure the invoice gets to the client. Yes? Faster time, helps you on working capital management, helps you on efficiency and so forth. So a little bit more flavor on contract selection and execution. This is the heart of our business. We're a contractor, so we are working on contracts. Opportunity selection. And I think a lot of this has been talked about already, but we have set, defined risk criteria, what are we willing to accept and where are we not willing to go. This becomes very important when you're tendering, when you're negotiating, when you're sort of out there hunting, trying to win the new work, trying to win a new contract, trying to convince the client of our ability to help them with efficiency and sustainability. But let's make no mistake, we're in competition. So when you tender, when you negotiate, you must remain steadfast within your risk corridor. That's extremely important. It is being tightly controlled within Bilfinger. For sort of the finance guy, the most beautiful contracts exceed the margin that we plan and the cash that we plan. It's not the nicest picture on the marketing brochure. Delivery capabilities. This is about -- when we enter long-term relationships, it's almost about a marriage. Do the capabilities of both partners fit together? We know what we can deliver. We know what we can do. But we need to ensure that the client understands what we can deliver, and we understand what the client can deliver. If you look at large construction projects, that is where it oftentimes fails. And then you get into long-winded tail risk discussion about who is at fault and so forth? And typically, the contractor is in a weaker position. So make sure that when you get together, you know each other. And then the last one is probably more speaking to myself and our organization. KPIs, performance measurement, performance measurement, performance measurement. It is key to success when it comes to contract selection and execution. Market positioning. We're talking about -- in the first place, first part of the journey, we're talking about scale effects. So as Thomas explained, we're in a location. We're selling certain services to the client. We have the ability to offer the client more services. Do we need a new organization there? No, we don't. We have one. Do we need new people there? No, we don't because we have people there. So that will help us add another percentage point. If we look at the sustainability partner aspect of the strategy, this will change our product mix. We will have a higher share of planning, project management, engineering type resources that we're selling within our contracts. That gives us the opportunity to command more and better prices. So hence, more money to the bottom line. As we have more responsibility, we have better control over our workforce on site. It's very expensive if you have 100 or 200 people on the ground and they are standing idle. If we are reactive, waiting for the client to tell us what to do, that tends to happen. Are we getting paid for this? No. Going forward, we have more control over this. And obviously, on being sustainable ourselves, we look at cost savings. You have seen the reduction in CO2. We will change the energy mix. We have put in place and are putting in place solar panels to generate electricity on locations that we have. And that will also help add to the bottom line. Now even more important, cash conversion, which is an efficiency measure, as you well know, on how you utilize your working capital. We look at making improvements there. Main driver for cash generation will be profitability, obviously. But then working capital management is another part of it. Have we made improvements? Yes, we did. We refer to NTA, which is net trade assets. Others refer to trade working capital. These are terms that you can use interchangeably. We've made another good progress in 2022 where the DSO reduced from 67 days to 62 days. But that's the year-end view. I'm of the opinion, we need to look at average because that is when you bring your working capital down. So here, we're looking at the average NTA as a percentage of revenue. We've made progress there, from 14.5% to 12%. There is more improvement to be had through the levers that we talked about, derisking contract portfolio that enforces a faster cash generation. It doesn't take months and sometimes years to negotiate the final settlement and the final payment with the client. Standardization of our offering or the positioning, all of this will optimize our billing process. In Germany, in 2022, we have sent invoices with more than 100,000 individual billing items. That's a huge administrative effort. Selling bundled services will reduce this substantially, makes it a lot easier for the clients to check the invoice, sign it off, approve it and move the money into Bilfinger's bank account and not the client's bank account. So as a summary, we're looking at revenue growth continuously. We're looking at EBITA progression. We're looking at cash conversion. All of this will enable us to have a net profit that allows us to continuously grow our dividend. You have seen the proposal for 2022, EUR 1.30 per share, which is up from EUR 1 as the floor, showing our confidence in our ability to deliver what we have and are showing you today. Investment-grade rating has been extremely important to Bilfinger for a number of years. We're not giving up on that goal. Investment-grade rating is important and remains important to us, forms an important part of our financial policy. So continuously growing dividend, funding organic growth, funding M&A if and where it makes sense to support the implementation and delivery of the strategy. We spent EUR 100 million in 2022 on a share buyback program. Are we going to do this year after year? No. But share buyback is a tool in the toolbox when you think about creating total shareholder return. So if and when it's appropriate, that's something that we will address and communicate. With that, I think I'll turn it back to Thomas.

Thank you, Matti. So as Matti laid out, these are our financial targets, '24 and '25 to '27. And you will see, after the lunch break, will you please mingle with the technical people upstairs? And I don't know if it's allowed, but if some would like to rope a little bit?

No, you need 3 days introduction. So if somebody has time for 3 days.

So, no, to be serious. I hope you see that this strategy is built up from the bottom, clearly, over action plans, clearly over transparency, clearly over KPIs, over time line. As I said before, it is important that we are that transparent and communicative on it, because your comments each quarter and each time we meet, how far we are, we can report on it, you can track us on it, and it will drive our internal performance, too. Because with that, we will lift up the accountability and all our colleagues will see which great job they do each day to fulfill these targets. If you have only one target, like return on capital employed, it's fairly difficult to explain a colleague out of the blue collar area, which kind of impact they have on the return on capital employed, which is reported once per year. That's not working. That drives accountability, and that puts us with self-confidence into the market where we have a big competence and customer relation, all opportunities to be in the core of all the industries. No matter if we produce catch-up which is nothing else with a lot of pipelines where liquid which is direct getting pumped through with somewhere in it, if we produce raw material for [ die pass ], which is a liquid where you have pieces of paper or wood in it.

Pulp.

Pipes.

Pulp.

Pulp and paper, as you maybe know. And or if you go into vaccine production and little pills, and yes, vegan cheese, what we will hear today about what that means, to replace cows on the grass field. That is what Bilfinger is involved, too. And no matter that we smile a little bit when we talk, we are unbelievably proud of our people doing that. We are unbelievably proud that we are in the core, and that will drive motivation and our self confidence to achieve that what we have here. So our strategy to move the company into that right upper corner will happen. That's a given. It will happen that we make the operational excellence, and it will happen that we position us there. And the mood and the tailwind what we have in the market -- in the organization, is significantly bigger than we see at the moment, the market momentum for us in the growth and that what we can do.

All right. So I think we're prepared to open up for questions again. [Operator Instructions]. And for here in the room, please give me a hand sign, and I can direct the question to you. First question comes from Michael Kuhn.

Michael Kuhn, Deutsche Bank. Maybe on cash return to shareholders, quickly. I think you sent a confident message with the dividend proposal today. You mentioned share buybacks is one tool in the toolbox, but not something happening every year. Have you defined for yourself some levels of excess cash where you would think about a share buyback or how, let's say, what would trigger a share buyback going forward?

Good question.

The question is if you let it out.

No. Do we -- did we define specific triggers? No, we didn't. I think we need to look at how we develop and how the market is going. Thomas was talking about the volatility that we're all living in. What you saw on the second last slide is a priority list where we look at growing the dividend continuously, funding our organic growth, funding M&A if and when appropriate, and as an additional option, to look at share buyback, but we will have to define sort of the criteria for this. That is not something we have gone through specifically.

Okay. Next question comes from Christoph Dolleschal.

Actually, 3 questions, if I may. Starting with the project business, which you want to have below 20% in '26, '27. So does that, first of all, mean no more projects within E&M, because I just did the quick math? So that means no more projects within E&M or shrinking the Technologies business? And for the other question, the second one is related to that because project business, I think, is -- if I also understand you correctly, one of the -- well, actually, not your rather, but one of the industry drivers right now because, obviously, there is a huge gap or a lack of energy transition that has happened in Europe. So why not participate in that? So it's rather a timing as of when do you want to get there. The third one is an M&A-related target, OOP. I mean I know it has been on the list to be sold for quite some time. The numbers actually didn't look that bad now. So is there probably a revision of plans with the business? South Africa, right?

So let's start with the project below 20%. You will actually see exactly how E&M Europe is doing in project business, technology and, of course, E&M International. That is, of course, quite clear. It's very important. We are not exiting project business. We will actually in force to make more projects in the green technology, and we will do their projects with long-term customers where we have a good chance and an opportunity to go into maintenance and so on and turn around later on. Only to do projects for the sake of projects for single client coming only 1 time in 30 years, if at all, with a high risk, it's not project business. It's actually a way to let profit go out of the window, and we will not do that. We have very competent people. They will focus on that where we will develop. But when you take it like this, then the reason why the growth rates are not so high is because we decrease this nonprofitable, high-risk, old-fashion construction-related project business. If you see that new project business, that grows quite a lot, but we have in the next 3 to 5 years, a decrease in the project, old project business. That gives that figure with the 20%. Second, the -- how to participate? Not every project which is built from a supplier like EPC or so. And we are with them, is then for us a project. If we go in and sell modular, you see that actually upstairs where we built a very modular plant very quick, the whole system, everything is from us, but this is not EPC. This is not for us a project. It's a product, how we do it. That's a product how we do it, and the profitability is higher and the risk is not there. And we don't take any process guarantees of something what we can't influence. So that is the derisking part in on one side. But on the other side, it's the growth to go into that green technology. That's the reason why, as I said, I'm not so sure if I said it here on the stage, if a country like Austria is looking into to transfer the gas pipeline network into a hydrogen pipeline network, we are on. It's us building and working on it. So we would not call that a project. It's actually a thing what we work with. And the last one is actually your business.

Yes. My business, yes. My most favorite business, South Africa. The plan to divest has been in place for a number of years. It's quite difficult to divest in a country where nobody wants to invest. Very tough to find international investors. There's interest, but it does take time. South Africa is not the fastest country in the world. Am I confident that we can get a deal done in 2023? I'm not so sure, but we're working on it. Yes, the business has performed quite well in 2022 on the back of a new contract with our largest client. That contract is for 4 years. So are we in a rush to exit? No, we're not. The business is making money, real good money. So from that point of view, we can take our time to find the right sort of successor to Bilfinger as the owner. And by the way, South Africa is the last business in OOP to be divested. We sold another business at the end of 2022.

Okay. Is there another question in the room? Yes. Next one from Mr. [ Leuver, SAB ].

Yes. Maybe one question. You mentioned the very strong repeat rate of 90%. Can you shed some light how this rate has developed over time? Because you could also have the question, should you be a bit tougher on the price negotiation with these clients and lower this repeat rate a little bit without harming long-term relationships.

You should come to my management and sales meetings to make exactly that. I am completely of your opinion. We should be tougher on the pricing. That's clear. Why? Because we add a very good value, but that the client understands that the company who provides that need a clear strategy communicated towards the customer and your own people. And that is what we do exactly today. Out of the good work over the last -- more than half year out of the own organization, if you don't have that confidence when you go out to clients, it's very difficult to argue why you should get more money. We will enable our organization to have that backbone back and going with a strong face and look out and asking for more money because we will get it. What was the second part of the question? Besides that, we have to make a sales meeting where he is invited.

Yes. If the repeat rate -- how that has developed over time. It has been high -- traditionally, it has been a high rate. When you're on the [ segment ], you are the incumbent for a type of service or various services. It's very hard to get thrown off the site unless you really fail the expectation of the client because we acquire domain knowledge. In many instances, we know more about the plan and the production than the client himself or herself. And hence, it is in the interest, not only from us, but also for the client to have a high repeat rate. But whatever is true on the pricing is true.

Okay. Next question, Gregor Kuglitsch, UBS.

Got a few actually. I mean maybe one sort of maybe big picture one, and at all, it obviously all sounds great from a numbers perspective. But in your view, what could go wrong? So the big picture one, maybe 2 technical ones after, but I'll give you the opportunity to answer that one first maybe.

Yes, I can take that first. What can go wrong? When we look into, we don't see that the market really is the big issue. We could have a lower growth rate if the market growth would go down to 0. But it's for each and every one. And I think you will -- then I think you will look to other things too, then only Bilfinger. But the self-propelled growth is a clear thing what we can do. So what can go wrong? If we don't execute, if you don't do that, what we promise, and you can judge us on it. That was our special wish. Matti and myself, they have a KPI list. They have a clear, what we call, lever, strategic lever list, which is communicated to you that you can check us. They deliver on that what they promise. So each capital market, we will come back and show you the levers, how far are we. Internally, every segment group function to -- takes the levers what they need to achieve and we can track them. So the summing up for all the levers in the organization actually gives the group levers. That makes it simple to communicate, simple to track and very important. I come out of a culture of motivation, not penalty. We do good things. And if you motivate people to go on good things, you get a great result. And that's actually the meaning behind that, too. It's transparent, and if we perform, it gets highlighted. So it's in our hands. The strategy is purely in our hands. The positioning, when we do it and so on -- of course, if we get another war where we have sanctions and so on coming, then everyone is limited. But what we see, it's in our hands.

Maybe looking quickly, and this is a technical question on the free cash flow conversion. I wonder, what's the gap? So why is it not 100? Because part -- you do give yourself tailwind, I think, of approximately EUR 40 million, EUR 50 million because this is a -- you're dividing EBITA divided by sort of pre-lease cash, right? So the pre-lease cash number...

Yes. Free cash flow divided by EBITA.

Yes, but it's before leases, right? So there's a bit of tailwind there. But the fundamental question is, what's the leakage? Is it CapEx investment? Do you have to invest a lot to get there? Or is it working capital investment? Or is there something else that may be tax, I don't know, you tell me. And then the second question is maybe a simple one, but I guess we can kind of calculate. But if you actually break down the business today into OpEx and CapEx, what's the CapEx part, 1/3 of the revenues today making, right? And what it's supposed to make? I know that's not how you report it, but I'm sure you know because it seems to me that's the delta, right? Your CapEx business making no money today and you want to shrink it and make it, I don't know, a profitable business, and that's actually a big tail. Can you just tell us what's the actual margin on the 1/3 of the revenue, roughly speaking, that's CapEx-related or project-based, and then, therefore, the other 2/3?

You start with the first part.

On the cash conversion, yes, there are some items between free cash flow and EBITA that don't allow us to go to 100%, right? It really depends on what level you are working on and you have the growth that needs to be funded. So it's -- that's that. OpEx versus CapEx, business breakdown, the 2/3 and 1/3, is that...

I can take that. What the profitability is on the 2 buckets? Actually, the -- we don't report like that. But what you can say is, and that is what you see, especially in E&M International, which was not breakeven. Yes. Actually, the -- we don't report like that. But what we can say is -- and that is what you see, especially in international, which was not breakeven. We were getting close to it, but we were not breakeven. Of course, we have old-style projects, what we will exit. They are not positive on the bottom line at all. So you can't generalize projects that's not profitable and recurring business is the only profit [ figure ]. That's not the case. You don't need a lot in some projects regarding failure and so on to have a negative result, which has quite an impact. And that business is all old style -- actually should have leaving the company years ago, business what we still have, or had, it's gone and impacting our results. What you will see in the future is that the project business will be in the same [ product ] range as the other business. Where is that coming from? The -- at first, the green technology is a new technology. For the customers, it's very important to get highly competent companies in to build it. Otherwise, it's a failure in the first pilot plant, big setup and so on. And that is well paid. That is well paid. Then the second part is to go with our long-term customers. We have that open book policy where we can tell customers, we do that for you. This is what it will cost us. This is the amount of money what we need. Otherwise, we can't set it up properly for you. So from that point of view, you will see, as then Thorsten says in the Technologies segment, how the profitability for that segment will be.

Okay. So the next question comes from outside and then you, Craig. The next one is from John Campbell, Bank of America. There are 2 questions. I start with the first one. Please could you provide an update on U.K. Hinkley Point C project and nuclear projects more generally?

Would you like to take that?

Hinkley Point? Hinkley Point.

Yes. No, regarding the payment. Can you repeat?

Yes. Hinkley Point. Update on Hinkley Point C? Yes, and nuclear generally.

Yes, that is easy to explain. It's actually quite public how HPC, the Hinkley Point Company is reporting, and we are exactly in the same loop as they are. We work full time on it. It is, from our point of view, I was several times there, it's a fantastic site, well managed by the British and the French colleagues, top work from EDF. It goes as they announced it. There was a delay in it, what they announced mid of last year. Of course, that is what we then enjoy and going forward. And that actually moves things only from a time line ahead. Then regarding nuclear business in general. The real interesting part for us is no matter that I'm quite vocal, or we are quite vocal that nuclear is green, and we should have nuclear power out of several reasons, we actually earn money on both sides: if we build something; and if we demobilize. And actually, we actually earn more money on it. And we had a fantastic good year actually in nuclear. We quite increased that business because when there is waste handling issues like with us, pick that, of course, a mine site, always beautiful to go underground. There are a lot of old barrels. We have to recover them. It's Bilfinger doing that. Up to the level that we built a plant, to clean light wasted -- nuclear waste types so that you can bring them back into a steel mill or anywhere else and utilizing the raw material further on. So we are actually in all areas of the nuclear business. And why is it important for us? It is important because we see all over the world, Japan included to India, China, U.S. Poland, Belgium is extending, Sweden, Finland, U.K., France. Wherever you look -- only not Germany, the nuclear business going ahead. And we have the expertise and we have the willingness to participate. It's in the core of that what we can deal with, and customers like it that we are with them.

And the numbers, the Hinkley Point revenues has grown to EUR 60 million in '22, and we anticipate further growth in the years to come on that. Second question from John. E&M International was guided to achieve at least breakeven in '22. What are the reasons for this miss?

The miss is not that big. No matter that, it's a miss. We didn't like it. And Christian will come to it in the presentation for the segment. And of course, what hurt us were old type of projects, what we definitely will exit. It's part of the strategy.

Okay. Next question, Craig, I think it was you.

Yes. Thank you. Yes, just a technical follow-up question from my side, following up on Gregor's question earlier on free cash flow. I noticed this morning also when you were giving your free cash flow targets, you also mentioned that CapEx will now be normalizing. If you could just follow up and give us an indication of what you're looking for in terms of normalized CapEx going forward.

2022, the CapEx into fixed assets was around EUR 50-some million?

EUR 52 million.

So without deducting for the sale of real estate, we see a number in the EUR 70 million to EUR 75 million range as our normal CapEx levels.

Yes. So it will rather approach the 1.5% of sales again.

Yes.