Orders Received: Increased by 11%. Revenue: Increased by 17%. EBITDA Margin: Improved by 50 basis points from 4% to 4.5%. Free Cash Flow: Increased to EUR109 million. Order Backlog: Grew by 20% overall, 4% organically. Net Profit: EUR32 million, up 27% from the previous year. Earnings Per Share: Increased to $0.84 from $0.66. Gross Profit Margin: Increased from 10.3% to 11.2%. Net Liquidity: EUR163 million. Investment Grade Rating: Upgraded to triple B minus.

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Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Bilfinger SE (BFLBF) reported a strong start to 2025 with orders received up by 11% and revenue increasing by 17%. EBITDA margin improved by 50 basis points to 4.5%, indicating better profitability. Free cash flow showed a significant increase, reaching EUR109 million. The company maintained its guidance with a revenue midpoint of EUR4.5 billion and an EBITDA margin of 5.5%. Bilfinger SE (BFLBF) achieved an upgrade to an investment-grade rating of BBB-, reflecting improved financial stability.

Negative Points

There was a slight negative development in safety metrics compared to Q1 2024, although improvements were noted versus the end of last year. Organic orders received decreased by 4%, attributed to market hesitancy due to political uncertainties in the US and Germany. The chemical and petrochemical industries remain challenging, particularly in Germany, affecting growth in these sectors. The US market faced delays in contract approvals due to political changes, impacting customer investment decisions. The company is still dealing with ongoing legal proceedings related to past construction business activities in the US.

Q & A Highlights

Q: Do you see signs of normalization in the US market, and how is the sentiment in Europe following the new German government? A: Thomas Schulz, CEO: We see stabilization and improvement in the US market. The initial uncertainty caused by government actions is easing, leading to a better mood. In Europe, the quick formation of the new German government has positively impacted sentiment, although companies are still optimizing their operations. We expect this to improve efficiency and competitiveness in the long term.

Q: Can you provide more details on the recent M&A activity, particularly the acquisition of nZero, and your plans in the US and Middle East? A: Thomas Schulz, CEO: The acquisition of nZero enhances our capabilities in gas treatment and hydrogen-related services, making us more competitive. We continue to focus on M&A in the US and Middle East, ensuring any acquisition aligns with our strategic goals and delivers shareholder value. We aim for acquisitions that can quickly integrate and add value.

Story Continues

Q: How is the Pharma sector performing, and is the growth broad-based or concentrated among a few clients? A: Thomas Schulz, CEO: The Pharma sector's growth is broad-based, driven by the industry's need to localize production and accelerate product development post-COVID. This trend is expected to continue, with strong demand for our services in Central Europe.

Q: Regarding the completion of the US legal case, was this included in your guidance, and are there any other pending legal issues? A: Matti Jaekel, CFO: Yes, the settlement was included in our 2025 guidance. We have a few remaining legal matters related to past US construction contracts, but these are typical and being addressed.

Q: How do you view the current demand trajectory, given the organic order decline? A: Thomas Schulz, CEO: Despite the organic order decline, we remain positive about growth in 2025. The first half of the year was affected by political uncertainties, but we expect improvement in the second half. Our recent acquisitions, like Stork, are performing well and enhancing our competitiveness.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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