Good day and welcome to today's SPIE First Quarter 2024 Results Conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to register for questions, please signal by pressing STAR one on your telephone keypad at any time. At this time, I'd like to hand the call over to Gauthier Louette, Chairman and CEO. Please go ahead, sir.
Yeah, good morning, ladies and gentlemen. Thank you for attending this conference for the first quarter of 2024. Let me start by saying that I'm really pleased with the performance of this quarter. It is indeed a good start to the year. We continue to enjoy a high dynamic, strong organic growth at 6.2%, positive momentum on our markets overall. We are very active on our Bolt-on M&A strategy with two deals closed this quarter in Germany. And along with the closing of Robur in March, it reflects our strategic focus to position SPIE on strong segments in Germany. Once again, our positioning and our model are proving their effectiveness, and I'm pleased to underline the high quality of execution of our teams across the board. Talking about our teams, today happens to be the 2024 World Safety Day.
This is a very important day for SPIE, as safety is a key priority for the group. It gives a special opportunity to sensitize, again, everyone on safety through interactions, dialogues, and training about the risk in the different SPIE's environments. This takes place as we speak in all our locations. Our efforts about safety are innovating at SPIE, and this is why I'm particularly distressed that we suffered a tragedy in Africa last month with a production well accident on a client's rigs where six fatalities occurred, five of them being SPIE's employees or subcontractors. We are taking care of the families, and the investigation is ongoing. We must go on. Safety is every business, everyone's business at SPIE, and we will continue to work very hard to protect our employees. Moving to slide four, on March 21st, we hosted in Rotterdam the sixth edition of our Innovation Day.
More than 60 projects were submitted in areas as diverse as artificial intelligence, hydrogen, cybersecurity, circular economy, knowledge management, and energy storage, and also safety with new methods and tools to prevent risk. 10 prizes were awarded across our business segment, including a new sustainability prize. At SPIE, we strongly believe that innovation stands from collaboration and the share of experience, and it will support our development and our performance for the future. Moving on slide five to one example of contracts. This one is in Poland. We signed an agreement with PSE, the main transmission system operator of the country, for the extension and the modernization of a substation in the northern part of the country. The project entails replacing outdated equipment and integrating new 400 kV lines.
It is part of a broader program to improve the reliability of electricity supply and also to support new renewable energy sources, including offshore wind coming from the Baltic Sea. And then on slide six, an emblematic contract we have in Germany at the Elbphilharmonie in Hamburg where SPIE implements smart digital solutions. Since the building's inauguration at the end of 2016, we have been involved in the facility management of the building with our own employees on site every day of the year. We have been able to offer innovative solutions to significantly increase the safety and the efficiency of the technical building's installation for a prestigious venue that welcomes over a million visitors every year. Moving to the first quarter of the year, overall positive dynamics on our markets, strong organic growth at 6.2% after a record year in 2023 at 8.4%.
We benefited from a high contribution from bolt-on acquisitions at 5.1%. And looking ahead, we confirm our 2024 outlook. Looking in more detail at our numbers, the revenue exceeded the EUR 2 billion mark, being up by more than 11%, driven both by organic growth and the contribution from the bolt-on acquisitions. Our M&A activity has started well, with two acquisitions representing already circa EUR 245 million annual revenue, and there is more to come. On slide 10 this quarter, with a group organic growth at 6.2%, we saw France in a very solid pattern, and Germany recorded a good level of organic growth. We saw remarkable dynamic in the Netherlands, in Austria, and in Poland, and Global Services Energy was at an exceptional level of +43.7%. We can also highlight the 17% + 6% growth in Germany, which reflects the dynamic rollout at the SPIE model in the country.
In Central Europe, it's to be noted that our performance would have stood at a double-digit organic growth, excluding Switzerland, which has been impacted by a very demanding comparison basis this quarter. Altogether, a strong momentum in Central Europe. Slide 11, dipping more into details by region and starting with France. Our French operations have delivered a solid 2.2 organic growth, a good achievement considering the very high comparison basis from last year. Building Solutions have shown remarkable performance with energy-efficient initiatives and digital transformation projects. Tech FM contributed also to this solid performance and has secured strong contract renewal and additional work, what we call the churn when you do additional works on top of the base maintenance contract. The City Networks division has been supported by smart infrastructure projects to sustain smart city developments. Industry Services remain resilient, high-value-driven contracts in electrification and decarbonation.
And finally, the Nuclear Services , now reported in the French segment, while constrained, continue to promise excellent prospects with strategic agreements now being renewed. Turning to Germany on slide 12, we continue to see a positive dynamism on energy transition markets linked to the change in energy mix, energy efficiency, and electrification. The amount of work to be done in the next coming years is massive. This explains our recent M&A acquisition to further strengthen our positions and deploy our model in this country. The good level of organic growth at +4.1% illustrated this pattern. High-voltage activities were particularly dynamic and benefited from the ramp-up of several projects, while the comparison basis was low in Q1 2023 in this activity.
City Networks & Grids benefited from the strong drive for adaptation and upgrade of distribution grids, but also fiber optic rollout projects, as Germany is lagging behind the other European countries in that field. The Tech FM division, at a slower step compared to the other segment, it will progressively ramp up along the year, driven by the permanent focus on energy efficiency and the shift towards decarbonation. Overall, this high-level growth in Q1 at + 17.6% is in line with our strategic ambition for establishing a strong positioning on our biggest addressable market. Moving to next slide, we're taking a look at Northwestern Europe, which did report a very high level of organic growth at + 10% in Q1. In the Netherlands, high-voltage activity was really strong, mainly driven by renewable energy connections and grid modernization.
We also saw a lot of activity in renovation projects for bridges and locks. Building Solutions was very dynamic, focusing on renovation and decarbonation needs. Industry Services benefited from the need for transformation towards electrification, and we see more and more complex and highly technical solutions being designed in partnerships with our customers. In Belgium, the growth was propelled by the demand for energy efficiency in building renovations and as well by high-voltage project investment by the main transmission system operator, Elia. Moving to Central Europe, it is now presented as a separate segment due to the significant growth we enjoyed in the recent years. The organic growth in Central Europe, excluding Switzerland, was double-digit and mainly driven by Austria and Poland. Austria's market is especially strong, benefiting from investment in infrastructure projects, notably tunnels and transportation. Poland has a good balance, enabling us to capture growth in high-voltage.
Building Solutions and Technical Facility Management sectors. In brief, the strategic acquisition made over the past two years in Central Europe has well positioned SPIE to capture market growth. As already mentioned, Switzerland faced a dip in organic growth due to an exceptional high level of activity in Q1 2023, catching up with the prior supply chain delays that we have been explaining. Now finally moving to global services energy on slide 15. An exceptional level of organic growth at +43.7% in Q1. This substantial growth has been primarily driven by the full ramp-up of several contracts in West Africa and also by operations linked to a maintenance shutdown in Nigeria. The segment has favorable midterm prospects supported by the nature and extent of the contractual base, and Correll is the first good step to grow further our wind business.
On slide 16, talking about our bolt-on strategy. So a very dynamic start of the year with EUR 245 million full-year revenue acquired. Two acquisitions made in Germany in line with our strategy to grow further in Germany, which is our largest addressable market. And in two areas which enjoy very strong momentum at the moment, so first being ICG in telecommunication infrastructure and optic fiber rollout. I was at the kickoff meeting of integration of ICG two days ago, and it's a very dynamic team with a very positive attitude to the new ownership. And then MBG, which is a company based in Berlin addressing solar and wind engineering, very good positioning, very strong momentum in this market in Germany at the moment and for the years to come. On top of that, we have a rich pipeline of opportunities across our geographies, which will ensure sustained growth.
We'll see we'll maintain our rigorous and strong discipline on the integration processes. Now we'll hand over to Jérôme. We'll comment further this trading update.
Thank you, Gauthier. Good morning, everyone. I'm on slide 18, starting with the revenue bridge for the first quarter of the year. We achieved a sizable total growth of 11.6%, pushing our Q1 revenue beyond the EUR 2 billion mark. This includes a significant organic growth component of 6.2% after Q4 2023 at 5.5%, and while the comparison basis is quite high with +10.9% in the first quarter 2023. Contribution from the acquisitions accounted for +5.1%, representing circa EUR 100 million of revenue in the first quarter 2024.
This includes the contributions from acquisitions made in 2023 that were not in scope in Q1 2023, as well as the contribution from the acquisition completed in 2024, notably Robur for 1 month as well as Correll for three months. As a reminder, Robur will be accounted for 10 months in the full year 2024, while Correll will be accounted for 12 months in the fiscal year 2024. Currency effects added a positive +0.3% of our growth, led by a positive effect in Central Europe for +0.4%, mainly in Poland with the appreciation of the Polish zloty, and partially offset by -0.1% impact in global services energy sector, mainly linked with the U.S. dollar.
Slide 19, we wanted to take the opportunity of this trading update to come back on the nature and structure of our contracts, as well as the visibility we have on our business, notably at the beginning of each year. Starting with the visibility on revenue, this is on the left-hand side of the slide, we usually observe and in practice, we have seen that for decades, a recurring pattern with around 85% of our forecasted revenue for the year being either secured, these are contracts within our backlog, or certain by nature, this is what we call the fonds de commerce or flow business activities. These ones are related to historical clients providing SPIE with several purchase orders, and this on a regular basis every year. The remaining 15% called find and do being gradually covered by new purchase orders secured during the said year.
Now on the recurring nature of our revenue, this is on the right-hand side of the page. You can see the types of contracts supporting our business and the relationship with our 26,000 customers across the group, starting with the multi-year maintenance contracts, which duration may vary from three to five years on average with a high level of renewals. Those contracts always come with additional works, what we call the churn, and which can represent roundabout more than 50% of the maintenance-based contracts. Then framework agreements. They define works and services to be performed for which SPIE is retained as the incumbent service provider and receives purchase orders from the client all along the lifetime of the said contract, lifetime of that contract being usually three to five years. These types of contracts predominantly apply with local utilities like the DSOs in Germany, telco operators, or large industrial players.
Together, pluriannual maintenance and framework contracts, they do represent more or less two-thirds of our total annual revenue. The remaining third, which is made of small works and projects, mainly ordered by very well-known and long-lasting clients. Here, we are talking about projects and related orders ranging from a multimillion-EUR substation construction project, for instance, to EUR 10,000 purchase orders for a wide array of customers. In a nutshell, the contract base for the group is very solid, and our relationship with our clients is even strengthened by the mission-critical nature of our services, as already explained, as well as the technical complexity and high added value of our solutions. The quality of execution of our services also remain extremely important. This is a key success factor in supporting our long-lasting relationships with our customers.
Finally, as margin over volumes always apply, let me remind you that in a context of labor shortage and rather dynamic demand, the reliance on us by our customers also favors a better pricing power. This is ending my part. I will now hand over back to Gauthier.
Thank you, Jérôme. I'll conclude with my favorite motto. It's a good time to be an electrical engineer. SPIE is in the strategically positioned to address the critical shifts in the energy landscape. Our growth driver includes a transition to sustainable energy sources, an emphasis on energy efficiency, the adoption of low-carbon transport solutions, and digital innovation. These are structural strengths and a fundamental requirement for our economy and more broadly, our society.
Moreover, our expansion is bolstered by stringent EU regulations, durably high energy prices, carbon taxation, a push for electrification and decarbonation, and a strong ESG investment focus, all of which favor our expertise. SPIE is well positioned to capitalize on these elements, which collectively reinforce our market position and growth trajectory. On slide 22, we'll confirm our outlook for 2024. We have full confidence in achieving our financial guidance. For organic growth, you will have in mind that we have a much higher comparison basis with exceptional levels reached in 2023, and labor shortage remains a key area of focus for SPIE. For EBITDA margin, we continue to deploy the operational drivers to improve margins and are faring well in this regard. M&A remains very active, as illustrated in this presentation today.
There is no change to the proposed dividend policy at 40% of adjusted net income attributable to the group. This concludes our presentation. Thank you for attention. And Jérôme and I will be pleased to take your questions.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. And please make sure the mute function on your phone is switched off to allow you signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. And our first question comes from Simona Sarli from Bank of America. Please go ahead. Your line is open.
Good morning, gentlemen.
First of all, my sympathies to the SPIE employees involved in the accident in Africa. So I have three questions. First of all, on your guidance for 2024 organic growth, so it's quite generic, and considering that the comps will be sequentially easier, is it fair to say that Q1 at 6.2 will be the trough organic growth that we are going to see through the year? And if you can try probably to quantify a little bit more the organic growth in 2024. The second one, can you try to quantify what is currently the organic growth or at least the differential between organic growth for your order backlog and order intake versus revenue? And the last question is regarding your increasing exposure following recent M&A in Germany for industry.
Can you comment on the cyclicality of this business versus the legacy business, which is more exposed to high voltage? Thank you.
Yeah. Thank you, Simona. Obviously, as you said, we have a good start to the year. It doesn't mean that we'll maintain this organic growth for the year. It's not a commitment we are making today. We have given a midterm guidance for organic growth at 4%. We had an exceptional 2023, and then we have also more than exceptional first quarter of oil and gas this quarter. So I think we should remain a bit more cautious for the organic growth for the whole year. Regarding order intake, we do not communicate on organic growth for order intake, no backlog. But it suffices to say that we're in a good shape. We had a very good order intake in 2023.
We started the year with a record backlog, and order intake in the first quarter remains dynamic, so no quarrels here. Regarding the exposure to industry in Germany, well, it was our aim to get exposure to the industrial segment in Germany, and we did reach it with Robur. There's an element of the customer of the BridgingIT who are also in the industrial sector. Obviously, it's very early days with Robur, but we do not see any deviation from the assumptions made at acquisition stage. It's a lot of recurring business, a lot of maintenance contracts, a lot in transformation of processes also in Germany, robotics, etc. So it's good positioning. Well, we have started the integration process. Again, it's going well. A lot of rebranding already taking place. Good atmosphere, positive attitude.
I was also part of the kickoff meeting for this integration and the opportunity to meet quite a few managers of or mid-level managers of Robur and a very good first impression and very good start of the process.
Thank you.
Thank you. And we will now take our next question from Rory McKenzie of UBS. Please go ahead. Your line is open.
Good morning. It's Rory here. Two questions, please. Firstly, on global services energy, how do we think about that really strong 44% organic growth? Was any of that one-off work just in Q1, or should we think about the majority of that as reflecting the new run rate of revenues that should sustain over the next three quarters this year? Then secondly, in Germany, you spoke about you expect a good ramp-up in Tech FM. Can you talk more about the kind of contracts there?
Is that work you have signed? And so do you expect organic revenue growth to improve overall in Germany over the year? Those two, please.
Well, regarding global services, as I mentioned, there are ramp-ups of new maintenance contracts that we did sign, especially in West Africa. And there's also a one-off, as I mentioned, which is a large maintenance shutdown offshore Nigeria. These are contracts which span over a limited amount of time, six to eight weeks. It's a huge amount of work concentrated on this period. Obviously, 10 days, one year preparation, but then you have six to eight weeks of intense activity. And this is what we see now in Q1. So we'll see we come back to a lower organic growth for the year, but we're looking together at a good year for the oil and gas part of LGSC.
Regarding Tech FM in Germany, yes, there will be some ramp-ups. We see an amount of churn work coming. We have also gained a number of new contracts. So we're confident about the Tech FM activities. It's a very strong position for SPIE in Germany, high-quality teams. And so we see good development for this year. Generally, the German business is doing well. So again, we have a good start to the year in terms of organic growth. We have a ramp-up of high-voltage contracts. So you see we have a very good visibility for this year. So we do expect a good year in Germany. Maybe it's worth it. It's the time to mention that now, with the acquisition of ICG pro forma, I think we're looking at a German business this year, which will probably become the first business of SPIE.
So it is quite an achievement over the last 10 years with margins which are on par with the best performers of the group.
Yes. No, that's helpful. Thank you. And just wanted to follow up on Tech FM. It sounds like Tech FM is performing well for you across lots of regions. I think it also won the top prize at your SPIE Innovation Day, one of those projects. Can you talk about whether your offering here is seeing you win lots of new clients in this market, or are you just kind of going around and doing lots of new work with your existing client base? Because it does sound like you're outperforming the end market quite a lot here.
Well, clearly, now moving talking not only about Germany, but where number one in Tech FM is the Netherlands with the acquisition of Worksphere.
They're doing really well and expanding their customer base, maintaining the existing customers and getting new ones. Also, strong position with, for instance, the Minister of Defense in the Netherlands, but also with a large number of other customers like also the Royal National Bank. So, very strong position in the Netherlands, and it's growing in France as well. In all these areas, we are gaining new customers and obviously paying a lot of attention to retaining the existing ones. The amount of churn work has been quite strong over the last year, and we see a similar pattern this year. I think the new ways of working have entailed much more technical installations in the building in terms of videoconferencing, communications, high-speed Wi-Fi, etc., etc. So, there's a lot of equipment in the office premises, and there's this drive for energy efficiency.
And we have introduced very innovative digital solutions which are very much welcomed by the customer, which put us in a different place because we do have a sort of edge on the market in this regard. So I think we have a very good cooperation between all the countries in terms of Tech FM, with an innovation center being installed in Germany. And so yeah, very positive dynamism, good cooperation, strong team.
Very helpful. Thank you.
As a reminder, to ask a question, please signal by pressing star one. And our next question comes from Augustin Cendre from Stifel. Please go ahead.
Hello. Thank you for taking my questions. I've got three, if I may. First one is on you posted a 2.2% organic growth. I was wondering if you're still impacted by the fiber activities gradually stopping or if you're managing to reallocate your capabilities in other sectors.
My second question is on Central Europe. Apologies if I missed that, but you mentioned some strong organic growth in Austria and Poland, but yet the division posts a 3% organic growth, which is a sharp drop, sorry, against Q4, which was 19%. So is that drop only driven by the high base for Switzerland, or are there any other effects in that? And I've got one last question on your bolt-on acquisitions. How do you feel competition has evolved when it comes to M&A? And could you elaborate on the competition from PE as well? I believe that in the past, you were competing against PE for deals, but now it seems like you're buying from PE. So any insight on that would be helpful. Thank you.
Well, regarding France, as we mentioned, we see obviously we no longer have the drive of optic fiber. On the contrary, optic fiber tends to decline in France, so it creates a bit of a drag. In Central Europe, without Switzerland, as I say, we would have a double-digit growth. When I say double-digit, it means 11%. It is more than that. So it's a very good dynamism in Central Europe outside of Switzerland. And we have explained the fact that we know the activity in Switzerland has normalized. We had a very strong push in 2023, which in turn was compensating lots of delivery delays in 2022, especially with our main supplier, Cisco. So 2022, not a normal year. 2023, exceptionally high due to catch-up of 2022. And we no longer have this exceptional effect in Switzerland.
So obviously, we have a drop in organic growth for this quarter. But the bulk of Central Europe is doing very well. Poland and Austria as well, where we are market leaders in tunnel installation. There is quite a strong wave of tunnels renovation in Austria right now, and we do benefit from it. Regarding acquisition, our acquisitions are made from various owners, and more than often, it is family companies. There is the odd private equity ownership from time to time, maybe sometimes for the larger ones, but it is not systematic, and it doesn't change our approach in terms of valuation. So regarding competition, well, probably 80% of our deals are done on a one-on-one basis, as we have exposed in the past. Some years, it is even higher than that. And sometimes we do compete about private equity. Sometimes we do compete about also other trade buyers.
There's not a single pattern there.
Okay. Thank you very much.
Thank you. And as a final reminder, to ask a question at this time, please signal by pressing star one. We will pause for just a moment to give an opportunity to signal. And since there are no further questions at this time, with this, I'd like to hand the call back over to Gauthier Louette, Chairman and CEO, for any additional or closing remarks. Over to you, sir.
Well, thank you very much for attending this call, and thank you for the interest you take in SPIE. I think we had a good start to the year. We're enjoying strong underlying trends. We have a very good execution, which makes us also very confident regarding our margins going forward. So far, so good. Thank you very much for your attention today. Have a good day.
Thank you.
This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.