Ladies and gentlemen, a very warm welcome to our Bilfinger second quarter 2025 results conference call. My name is Jasmin Dentz and I'm joined today by Thomas Schulz, our Group CEO, and Matti Jäkel, our Group CFO. As always, all documents related to our Q2 reporting have been made available on our website. As usual, we will start our webcast with a presentation on the quarterly highlights, the current market environment, and our financials, and then open the webcast for your questions. You will then be able to ask questions by pressing star and one on your telephone keypad or via the chat function. At this time, all participants have been placed on a listen-only mode. The webcast will be recorded and I will now hand over to our CEO. Thomas, please, the floor is yours.
Thank you, Jasmin. Hello everybody out of the very warm Mannheim here in Germany. Let us start with the highlights for the quarter two. It was a quite successful quarter. We were, in the order, received 18% up, organically 16% up. Actually, the highest order intake for most likely all time. When we look into the revenue, it's 4% up, organically 2%, and the EBITDA margin developed itself from 5.4% to 5.5%. Here we had, in last year, a special effect in it with the badwill of EUR 10 million. We actually compare with an increase of 1990 basis points. The cash flow is more than double. It's a 103% growth. We, of course, confirm the outlook. As always, we confirm the mid points of the outlook. All that what I just said for our performance in quarter two is in a very volatile market.
We see for our business quite a stable development. On top of it, because it's part of our vision, it's part of our business model, it's the core of our strategy, the efficiency and sustainability, we got the Net Zero Targets approved by the Science Based Targets initiative. Last but not least, we will have a Capital Markets Day on the 2nd of December, and there we will give new midterm targets up to 2030. Before we go further into the business, some ESG topics which are utmost important for us as Bilfinger, especially the safety. We are under the top performers in all the industries where we work regarding the safety. This is not only important for us as an employer and for the culture within the company and the culture to work with partners and with customers.
It is actually a given thing if you would like to have sustainable long-term contracts and partnering with the clients that you show a good performance. Here we show a slight improvement on the Total Recordable Incident Frequency. We actually lowered it from 1.01 to 0.89. This figure, this KPI means it's the amount of incidents what we had regarding 1 million working hours. Below that graph, you have the Lost Time Injury Frequency. This is a similar thing. It works against 1 million working hours, and it's about all the incidents where we lost working time because people had to go to home early or to hospital and so on. Both for us in the right direction, but of course, our target is to be zero on both, and we work on that. On the right side, you see the announcement what I had on the highlights.
It's about that our Net Zero Targets are approved by the Science Based Targets initiative. The reduction of absolute greenhouse gas emissions in scope one, two, and three by 90%. This is for us as Bilfinger, this is for our suppliers, for our customers, a very positive news. Out of that, into the business, into the industries. As you know, we cover the industries where we have sustainably more than 10% of our revenue line realized in. This is for us the chemicals, petrochem, the energy, the oil and gas, and the pharma, biopharma. We are, of course, in significantly more like food, utility, mining, cement. We are in more industries. This is for us the package of the most important ones. On the left side, you have the production index. It's an indicator of how the industries in the areas U.S.
or North America, Europe, and Middle East, that means our area would be covered from Bilfinger's side, develop in the business since the base year 2019, the last year before corona. When you look on that graph, you see that we actually have since 2019 for three out of the four, more or less no real growth realized in the industry. Only pharma, biopharma sticks out. To give a little bit more details, in the chemicals and petrochem, we have significant regional differences. We have areas like in the U.S. or in the Middle East and partly in Europe with good growth rates. On the other side, especially in Germany, very much challenged. Our revenue share is 23%. Based on that mix what I just said regarding the regional differences, our demand moves sideways. The outsourcing potential, especially for clients being challenged, is quite good.
In the energy sector and energy industry, this is mainly driven for a higher demand on storage and transmission, for a higher demand of availability, for a higher demand to get sustainable, predominantly sustainable, but fossil energy too stored and delivered into wherever people live and are. This is 23% of the revenue share. We see the demand positive and the outsourcing potential where customers could give us and can give us and give us actually complete parts of their maintenance and engineering-related part is quite good. We have oil and gas. Oil and gas outside Europe, there is definitely a revival into fossil oil and gas supply and investments, especially in the Middle East, but in the U.S. too. Europe has a strong LNG demand.
Both situations, Middle East as well as U.S., and then Europe actually is positive in the demand for us, and the outsourcing potential is positive. That part is 20% of the revenue share. We look into our booming industry, and that's pharma, biopharma. As we say for two to three years now, the localization demand, the reduced time to market, the faster realization and execution in that industry since corona is over actually drives here the growth. It's 13% of our top line. Demand is good, and the outsourcing potential is good. Out of that, we go into some selected orders to give you a kind of a picture. What are we doing? 80% of that what we do with any client is more or less the same. This is the beauty of the Bilfinger group.
We can move our experts from one industry to another, from one geography to another, and with the competence that we have, we can serve independent industries, which gives us a kind of a resilience no matter how the industry goes. Let us start with chemicals and petrochem. Here with a long-term customer, Mitsubishi Chemical, we are for more than 20 years operating maintenance and other things on these assets. Now they decided for a new line, and we enjoy to get the contract for EYNC for piping, steel work, and other things, and of course for the maintenance. It's a proof of our good efficiency improvement performance that we deliver to that client for a very long period of time. In the middle part of the slide, it's from UAE. It's out of adjacent industries, not out of the top four.
It is actually about a better supply and enhanced supply of potable water. We do the piping and the mechanical service for a desalination plant. On the right side, Germany, on the energy part, it's Berliner Energie und Wärme. Here it's about the planning and assembly of five large pump stations to modernize district heating. District heating, we see more and more, especially if you go from a geography in Europe, more to the north and more to the east. I made that comment this morning too. If there will be in any way less war activity or no war any longer in Ukraine, we see especially in that part of the world a big demand for district heating modernization or rebuild because former Soviet Union countries depend in the wintertime very much on district heating systems.
Not to talk about that we are, of course, able to offer district cooling systems in line with the district heating if the summer gets quite hot as we enjoy it at the moment. Out of that, into innovation. Industrial service providers are not that much known for innovation, but we do a lot. We do it the following way. We look into different industries, take their innovation and combine it to make tools and offerings to our clients. Here we have, again, an innovation in the digital part. What we drive a lot, we are very much looking into and working in the direction of artificial intelligence too. It's Bilfinger Iris 3.0. It's a mobile all-in-one maintenance tool. To give some information about that, it's cloud-based. It's real asset data storage and analyze.
It is automatically connected to the client, which is not a given, especially not in Europe where every country is doing everything to be different than the others. We are in line with all the local requirements. The customer gets with that the possibility to see a more efficient planning of the maintenance and a more optimized utilization of their assets, no matter if it's e-machinery, valves, or pumps. We as Bilfinger utilize that, let the customer participate in it, and it gives us, and with that, the customer the possibility to be more efficient in predictive maintenance. Not only higher data quality, not only more time saving, actually we are getting more and more into a position to see inefficient things happening before they happen. We can do, of course, good maintenance work against that. Another proof how innovative we as Bilfinger are for our clients.
With that, we go into the business back, how it looks like. The opportunity pipeline, as you well know, the business we can bid on and where we see it will go on, and it is indexed to April 2023. It's the graph on the left upper side. We show that over two years that you see the development, how we are, on which kind of pie we can bid on. When you look into it, you see that actually since the quarter two last year to the quarter two this year, this amount where we can bid on is actually not growing. We are growing. As you see in the next part of the graph, in the middle part, we had 18% orders received growth and the 16% organic growth. We've closed to EUR 1.8 billion.
This is the highest what we can find in all the data regarding the Bilfinger Industrial Service Company. This is a good development, but we have volatility in the order intake. There are reasons because we had a renewal of contract. We have some larger contracts in, and it's a great figure, but don't expect that this will come each quarter. The order backlog, which is for us utmost important, you see that we had not only in the last two years, actually in the last three years, if we would show that too, quite a good development. If you grow in your order backlog, more or less double digit from last year to this year with that volatile market, that's a very good performance of our organization. With that, I would like to give to Matti, our CFO.
Yes. Thank you, Thomas. Good afternoon, ladies, gentlemen. Let's take a quick look into the numbers and let's start with the group performance, and then we take a look into the segments. Revenue grew by 4%, organically by 2% to EUR 1.35 billion in the second quarter of 2022. We do see growth in pharma and biopharma following the strong order intake that we reported in the previous quarters. As Thomas alluded to, oil and gas continues to grow with a renewed focus on fossil fuels. Chemicals and petrochemicals overall continue a consolidation path. When we take a look into Europe, you can see the negative impact that particularly Germany has there. On the profitability side, we continue our margin progression quite nicely, 11.5% gross profit after 10.7% the year before. I just keep repeating myself, how do we do this?
Yes, we improve our operational excellence, efficiency, standardization, de-risking, better execution in the field are the contributors and the levers that are working to improve our gross margin. In addition, we see the positive impact from the acquisition last year that is performing much better than what we had expected during the due diligence, and that's fair to say. On the SG&A cost, it's EUR 86 million this year after EUR 86 million last year, relatively also a progression to 6.3%. We have included Rohde & Werk this year early on, so there's a full quarter of Rohde & Werk SG&A in there, and then there's a couple of months of N0, the acquisition, and hence in absolute numbers, we stay at the same level as last year, but relatively an improvement. That leads to an improvement in our EBIT to 5.5%.
You see the adjustment that we had in there of EUR 10 million last year. That's the badwill from the acquisition. If I eliminate this to go to a like-for-like comparison, we see 90 basis points improvement from 4.6% to 5.5%. Into the segments, orders received, again, Thomas mentioned this, we have received new contracts, but we also have renewed and prolongated framework contracts, important contracts. We see organic growth in the energy industry. We showed before the revenue shares of the industries, and if we look at chemicals for the first half of this year, it was 23% after 26% last year, and conversely, energy increased at the same amount to, that's need to take a look there, but to 23%. We see the shifts in our industries between the industries. Here, order intake is 9% organically to EUR 1.15 billion in the segment Europe.
Revenue is flat at + 1%, respectively - 1%. We see regional differences, German-speaking region negative and the other regions being positive. In total, that gives you a flat development in E&M Europe. However, profitability, again, if we take out the EUR 10 million badwill, we see 70 basis points improvement on a like-for-like basis. Also here, de-risking, standardization, and the very positive development of the former Stork business under our guidance and leadership has made a very good contribution to the profitability improvement. In International, our two markets, Middle East and North America, obviously, the order intake is very high compared to last year, plus 60%. That happens every three or four years. We have a very large framework contract in the United States that gets renewed and prolonged now for, I don't know, 85 years or so.
That really drives up the numbers in the second quarter of the respective year. Also, we have received orders, as we just showed before, in the Middle East for the seawater desalination, and that also is driving our growth there. What do we see in the markets? In general, in the U.S., the market remains cautious. The political uncertainties that you can read about every day in the newspaper do have an impact on investment decisions and mostly CapEx, not so much OpEx. On the other hand, we see Middle East and there's news about investment in production capacities almost every day. Also very interesting to see the market. On the revenue side, plus 4%. Here, the U.S. is slightly negative, but the Middle East is better, so positive. Everything is in line with our expectations. In particular, the oil and gas industry is here represented with good growth rates.
On the profit side, also in line with what we expect and in line with the outlook, 3.5%. Margin progression is also working here. In absolute terms, seven after EUR 4 million. Small numbers, but still the trajectory is the right one. When we talk about International, coming back to the U.S., just on a side note, we reported about the accident last year that happened in Georgia. In the second quarter, a complaint was filed in the court. The complaint was filed against several U.S. companies, including one of our subsidiaries. The whole case is in a very early stage. The investigations into the cause of the accident continue, and that's the sort of the latest status on that case. We move to Technologies.
Order intake is flat, not surprising because the businesses that we are in there, pharma and biopharma and energy, do tend to be more volatile in terms of awarding contracts. Last year, we had significant order intake from the pharma/biopharma business, and this time we had more order intake from the energy side, despite the fact that we do see delays in the projects related to energy transition. Financial investment decisions are being delayed as people review their projects and the markets pretty much on a daily basis. The revenue grew by 15% to EUR 205 million for the quarter. Strong quarter performance as we implement and execute the life science contracts, but also in the nuclear arena, we have seen higher revenues in this segment. The margin improvement here is an impressive 100 basis points compared to last year. The trajectory is also in the right direction.
Again, improved operational excellence through all the business lines that we're operating in in Technologies. How does that convert into net profit? Net profit is stable. The EBIT of EUR 72 million compared to EUR 70 million last year, quarter over quarter. Financial result is the same. The taxes are a bit higher. We've seen the tax rate increase from 25% to 28%. There are timing effects in there, tax credits when they are being granted. Nothing to worry about. In the end, these are small numbers so that the profit is absolutely in line with prior year, but also absolutely in line with what we had expected. Cash flow, I know that's the most favorite pastime of our CEO.
Thank you.
When he's not out there doing sales. Very good continuation of our cash flow performance. Continued good working capital management. On the right-hand side, you see how the relation between net trade assets and revenue is declining from 10% to 9%. Our target is to get down to 8%. I can only say it's working, and we will continue that as we go along. On net liquidity and leverage, starting off with the leverage, that's the usual seasonality that we have when we go through the year and then we pay out the dividend, which you can also see on the left-hand side from end of March to end of June. What happened there, we paid out the dividend, we continued the share buyback, and we paid for the acquisition of N0.
That took out some liquidity and we expect this to go back up again as we generate free cash flow. I think that's so much from my side, and I hand it over back to Thomas.
Thank you, Matti. When we look into the outlook, you see on that slide that we show the first half-year result for 2024 and 2025, and you see that we are from EUR 2.4 billion to a little bit more than EUR 2.6 billion in the revenue. The EBITDA from EUR 47 million, which includes the EUR 10 million of the badwill last year, into 5% this year, and free cash flow, quite a significant step up in that development too. Of course, we confirm the guidance, and when we talk about confirming the guidance, we definitely confirm the midpoints of the guidance, as we always do. For us as management, very important that we confirm, of course, the midterm targets. We are already excited about the new midterm targets, what we will announce then in December. Maybe that as an additional thing, we, of course, look into some KPIs and ratios.
How is our SG&A versus contribution margin versus revenue and so on developing? All that together actually shows that we are on the right track to achieve our midterm targets. That makes us confident, no matter that the market is very volatile around us with tariffs, which we are not impacted directly, then Ukraine war, then all the political situations throughout Europe. It's quite a volatile market, but a big thank you to our organization in these kind of volatile times to really perform well in line with that, what we expected. I would like to give back to Jasmin, but before I can go through the highlights again, orders up 18%, revenue 4%, EBITDA margin on 5.5%, cash flow more than doubled, our outlook confirmed, the Net Zero Targets are approved by the Science Based Targets initiative.
All that in a stable development for us, but a very volatile market. Capital Markets Day on the 2nd of December, where I hope that you attend with all the people you know. Now back to Jasmin.
Great. Maybe not all the people you know, but at least yourself. Thank you very much, Thomas and Matti. We're now happy to take your questions. If you would like to ask a question, please press star one on your keypad or use the chat function. To whisper your question, you can press star and two. Our first question comes from Michael Kuhn from Deutsche Bank. Michael, your line should be open now.
Good afternoon. Thanks for taking my question. I'll start with a number of questions. You did a good EUR 160 million of free cash flow year to date. If I strip out the one-off, the run rate per quarter in H1 was a good EUR 50 million. That said, profitability in H2 is usually higher. The question would be, what would drive to go so terribly wrong so that you only arrive at the low end of your guidance? Why not narrow the guidance a bit more towards the upper end?
Okay. Michael, this is Matti. On the outlook, free cash flow, that's what you're talking about. Why did we keep, I start with the second part. Why did we keep the guidance as it is? As you know, cash flows are volatile. We expect for the second half, as we have seen in the first half, a few larger new orders. Typically, we get advanced payments. The timing of those payments is hard to narrow down and to determine when they will happen. That gives us a bit of uncertainty. That is the reason why we kept the guidance where it was. Yes, we have a one-time effect in the first quarter, but that was already included in our guidance. Nothing out of the ordinary has happened. The second quarter, we'll see how much the volatility that Thomas talked about will affect us.
Typically, it does affect us on the cash flow sooner rather than later. That is why we kept the guidance the same. We also kept the guidance the same for all the KPIs with respect to the volatility in the market. As said many times before, we're targeting the midpoint of our guidance ranges. That is what we have confirmed again and again, and also today.
Understood. Thank you. One on the backlog, which obviously developed very nicely. The roughly EUR 4.5 billion that you have now, what is the phasing of that backlog and what visibility does it give you for the second half and also in terms of phasing into 2026?
What we look at month after month after month is how much of the revenue that we're targeting, and here the midpoint of EUR 5.4 billion, do we have under contract? At the end of June, we had somewhere between 85% and 90% of the planned revenue under contract for 2025. That means that about EUR 2.5 billion to EUR 3 billion out of the backlog is for this year. The rest goes into the next year's and very smaller portions go into the year after. Maybe by way of explanation, when we look at our long-term contracts, framework contracts typically, we only take into backlog the next 12 months of revenue. Other companies take the full duration, three years, four years, or five years. We don't do that. We've never done this, and we stick with our convention.
That gives you a bit of a reference to what the EUR 4.5 billion in terms of backlog means for us. We're very well covered for 2025, and we also have very good coverage already for 2026.
Excellent. Thank you. That last question. I would say the new German government got quite a bit of maybe premature praise right at the beginning. Obviously, I think some of the spending signals pointed in the right direction. Still, we are lacking real reform effort. Talks with your clients about potential decisions to keep capacities, build up capacities, shut down capacities. What mood do you see currently, and let's say what would be needed to really show a positive turnaround here? Obviously, so far we haven't seen a positive development yet, referring to your comments during the presentation.
Yeah. Michael, it's here, Thomas. We can say it like that. The new election in Germany actually brought very positive feedback and situation and mood into the industry. Everyone or most of the people in the industry said, okay, give them the 100 days to formulate good ideas, to formulate plans, and then to start to execute. We heard a lot of very good proposals, especially out of the Ministry of Economy, where we for years before heard really a lot of not so good things, which was taken by the industry very positively regarding pension, lifetime, social cost, work time, productivity, and so on and so on. It's now time to execute things. We formulated that the industry is formulating that the industry is open and would support activities immediately. There were several meetings with the government to show that the industry is willing to invest.
That means we are from a timing at a crossroad. If the government is starting to implement and to realize some of the good ideas, not all, but some of the good ideas, then not only the German industry would invest more, actually foreign investments into Germany would get unlocked too. Of course, on the hand side, you have, of course, the situation if they don't do anything and going on only to talk, and then that would be negative. We think some will come through, and it will be a way forward, which is slightly positive. As more as they realize reforms, as more positive it would be.
Thank you very much.
All right. Thank you, Michael. Our next question comes from Olivier Calvet from UBS. Olivier, please go ahead.
Yes. Hi. Hopefully, you can hear me. Good afternoon, Thomas, Matti, and Jasmin. Thanks for taking my questions. I have a couple. Firstly, on the U.S. incident you mentioned, with the claim that has been filed. I'm not sure what you can say at this stage. You mentioned it's early, but would there be a specific timeline for you to potentially build the provision?
Olivier, this is Matti. The complaint was filed. The complaint did not include any numbers, which makes it very difficult to even assess any magnitude. Until we know some sort of magnitude and can make an assessment, there is no, we have no possibility to take a provision, nor are we obligated to take a provision. Specific timelines on court cases are even more difficult to assess. What we hear from outside counsel is it will take time.
We are not talking here months.
No, we're not talking months. We're talking longer periods, yeah.
Yeah, whenever something comes, we will then inform about it. We didn't change our view on the case at all.
Okay. Thanks. The second one, just coming back to the numbers so far in the Technologies segment, I was just wondering, you know, trying to understand the margin ramp-up that you expect. It's obviously, as you said, you know, up about 1 percentage point in the second quarter, about 1.1 in the first half. I'm just wondering about the building blocks to get to that 6.3% to 6.8% EBITDA margin or maybe rather the midpoint of 6.5%, you know, for the rest of the year.
With the guidance, we are targeting the midpoints, not only for the group, but also for the segments. To be honest, the margin buildup is we're slowly moving into a territory that we believe we should have been in for a number of years. We have had issues in that segment, and they're well known to the community here that we got rid of, underperforming contracts, underperforming projects, businesses that we just stopped doing. What we're now seeing is that we're getting into the territory where we should be, also compared to our peers and competitors in the market. There is upside potential there, but it's hard work to really, you know, get it into the P&L. This is a special focus as we review our strategy and develop new midterm targets.
Yeah, we think it's good, the development. Are we satisfied? No.
Okay. Final question would be just on the pharma and biopharma. You mentioned, you know, you usually have this sort of ability to move experts from one geography to another. I was just curious as to whether you think this is an addressable end market for you when you think about your international geographies, your current footprint, or is that something, an area where you'd like to see perhaps organic growth through hirings or inorganic growth to support the growth in that specific industry?
Yeah. Let us say it like that. We have a strategy where we focus on two main strategic levers. One is the internal de-risking operational excellence, and the other one is the positioning. Especially pharma/biopharma belongs to that positioning part that we offer more of our good services where we are quite successful in the center of Europe, all over where we are. That started, but we are far from good in that. It takes just time to build the confidence, the resources in a way that you then get the orders because there are already existing suppliers. We see here a growth potential for the future. That will not impact that much 2025 or 2026. That will take longer time, as we said in the positioning part. The industry in itself, pharma/biopharma, actually food is related with it. Utility is related with it.
80% of that, what we do in that industry, we actually do in oil and gas. We do on nuclear. We do on other industries too. That's the beauty in it. We don't need to have a lot of people, actually only a few experts over the global product centers from one, let's say, from Europe into the U.S. to make business because the people, what we need on site to make the work we already have done in the local areas based on our business and our industries. For us, it's quite a growth potential what we have in front of us.
Okay. Very clear. Thanks.
Thank you, Olivier. The next question comes from Craig Abbott from Kepler Cheuvreux. Craig, we are curious to hear your question now.
Yes, thank you. Also three from my side. First, two more numbers related, and the third one more bigger picture. First of all, in E&M Europe, despite a sluggish top line, if you will, you managed to increase the margin, the underlying margin, another 70 basis points as you highlighted. I just wondered if specifically in that division, which factors are driving that mostly? Is it a rising share of de-standardized services? I would have thought more of the operational gains would have already been realized, or were there potentially mixed effects there? I'll leave it there and then ask my next two questions. Thank you.
Craig, Matti here. I think mixed effects is the right term. We have had a couple of regions where we needed to do more de-risking. That has happened. In other regions, we are driving product mix and standardization. Also, not to forget the real impressive margin progression that we have seen in our acquisition. You know, the former Stork entities that have really helped drive the underlying margin increase. It's a mixed bag of effects that are helping the margin progression there.
If I may just quickly follow up on that, to meet your four-year guidance range there, you're going to need further progression in the second half, and the second half is typically stronger. You see yourself very much on track.
That's correct. Yes, absolutely.
Okay. Thank you. My second question on the orders. We understand you made very clear that, look, we should not take the very strong Q2 numbers or run rate. We understand that. Nevertheless, would it be fair to think in the direction of still a modestly positive book to bill as being likely in Q3?
Yeah, there's no reason from our end to be afraid of sort of it's now stopping somehow. The pipeline, and I think Thomas showed it, the pipeline is very good. Our sales success rates continue at the rates that we have known from the past, and even some better. We're optimistic also for the second half in terms of a book to bill rate exceeding one.
Okay. Excellent. My third question is getting back to the discussion on the public projects or at least public-private energy infrastructure projects being outlined here in Germany. I saw some headlines that didn't dig into a lot of detail, but about the plans to move ahead with these gas power plants to serve as reserves to smooth out fluctuations in the renewable energy network. Any early thoughts here on what the potential opportunities could be for Bilfinger and whether or not any of this might already be reflected in that order pipeline? Thank you.
Yeah. Of course, we like to see the talks about the investment regarding gas power stations, especially if they are that advanced that you can switch them over to hydrogen, from fossil into hydrogen. That's what we like to see because we can offer a lot. For us, that's quite positive. It would be positive too to reactivate minimum three of the six high-tech nuclear power plants. That would be positive for us too. It is, of course, positive if companies invest and build into hydrogen energy, resources, and supply. We are actually a big player in that part too. For us, wind is with some business related too because we can offer very efficient energy storage possibilities, what we do for some of the cities in Germany. If it comes to solar, in the same.
Whatever the government is doing in any direction, we will have regarding the energy supply, of course, an advantage. The only thing is that they start to act to make it like this. I think the ideas are all on the table and they are discussed up and down, just act. I think you will have the same message from RWE and other German energy giants. We see that positive. It's not only Germany. We see that all over Europe, we see actually with the revival of fossil fuel and fossil-related energy in other parts, like in the Middle East or in the U.S., progression in CapEx. With that, then in the longer term, OpEx part where we participate a lot in, very positive too. It's nothing what we see is coming over the next week.
It will take time because it's politically driven and they always have a lot of time.
Yes, okay, clear. It's another, let's say, positive potential out there looking further down the road. Okay, thank you very much.
Thank you, Craig.
Thank you, Craig. Nikolas Demeter from Metzler wrote us a question in the chat and I'm happy to read it for you. Given the strong order intake, what should we take away from this? You mentioned higher order intake in the oil and gas and energy segments. This means we will see a continued shift in revenue mix away from chemicals towards these areas, right? How are negotiations with clients in these segments compared to chemicals? Are you seeing better pricing here than in the chemicals business? Based on the order backlog, can we expect a steady margin improvement going forward? I would appreciate if you could give us a bit more color on this.
Yeah, I think we answered that in a kind of a mixed couple approach. Given the strong order intake, what should we take away from this? Of course, positive. It makes us very proud in such a volatile time that our organization is able to deliver such a high record order intake. However, and that's always the German, but you know, it is, please don't go out and think each quarter will be like that. We had some special orders and contract extensions in the quarter, which we didn't have before, and we explained before why it's so weak or weaker. Now we have to explain why it's stronger. We have that volatility in the order intake. There is no seasonality in it. It depends very much on contracts and customer behavior and so on. You mentioned higher order intake in the oil and gas and energy segment.
This means we will see a continued shift from chemicals away. We always have a movement between the different industries. We should not really overstate that. We don't have a movement of 50% in one way or the other over one quarter. It's always some up, some down based on the timing where we are. Of course, we see in the chemicals and petrochem, the orders that we get, you get an order for 100 and you finalize it for 100. In good times, you get an order for 100 and you finalize with 130. You get additional work. That is with the challenge that they have in the industry, of course, not happening. When we have in the energy sector or in the oil and gas, you get 100 and you can make 130 out of it.
There is a kind of the amount of orders is actually not changing a lot. It's more the size and what comes as an add-on on top. We go further, how our negotiations with clients compare to these chemicals. Believe me, coming very much from the sales side, it's not so much about the industry. It's more about the culture you talk to. I can give you some cultures where it's very difficult to sell something and other cultures where it's easier. Important in one thing, or one thing they all have in common. If you are a company, as we, as Bilfinger are, where you are not offering only one work, one offering, one product, where you can combine and show the efficiency improvement when you have multi-trade, as we call it, up to solution partner. They are all very positive on that.
We definitely see more a movement into the larger suppliers with a bigger offering to combine and to be more efficient. Regarding the pricing, Matti, do we see better pricing or worse pricing in the chemicals?
Where there's cost pressure on the client side, they try to give that to their suppliers. When they come and talk to us about price reductions, we typically, our response is, let's talk about efficiency.
Exactly.
Because then you win and we win. Just a price cut or a cut to our price list is just not an option for us. It doesn't help. It doesn't help them and it doesn't help us. We encourage the discussion on efficiency. Efficiency is something that we are experts in, but it takes two parties. It takes the client and it takes ourselves. We have plenty of ideas on efficiency improvements and gains, but the client needs to be willing to discuss it with us. As we are an integral part of their operations, they need to be willing to make changes to their organization. Otherwise, it won't work. When you look at the energy and oil and gas segments, pricing is good. I think the discussions with the chemicals is, as I just alluded to, let's talk about efficiency rather than price cuts.
That leads me into the quality, and we talk about the quality of our backlog, and we have seen a steady improvement of the quality of our backlog, meaning there is a steady improvement of the margins that we do have in backlog, and they do convert into margin improvement in the P&L. That is how we see it.
At the moment, we still have two questions in the chat. Just as a reminder, if you would like to ask another question, please press star one on your keypad or use the chat function. It's another question from Nikolas Demeter from Metzler. It reads, it's now regarding the technologies segment where we are seeing a good development. One apparent driver of this growth seems to be the work related to nuclear contracts. Is this primarily linked to the construction of new nuclear power plants or to the decommissioning of nuclear power plants? Could you remind us again what exactly is being done in this area? Also, within the new order intake, are there new orders coming from the nuclear segment? In which countries do you see the greatest potential for this area going forward where Bilfinger can participate?
Yeah, we have, of course, everyone knows that we are part of the Hinkley Point project, and a new one is coming with Sizewell, a kind of a copy, which is good, but the whole world looks on that. In reality, in my life, I saw only once such a revival of an industry in that dramatic positive development as we see it for the nuclear industry in the last few years. That was mining after the financial crisis. Only Germany is the one on the wrong side. Only Germany is the blind one. Only Germany is the one where we talk about decommissioning of nuclear power plants. When in the U.S., they reactivate a 12-year MOF board power plant for Microsoft because they need more energy for their data centers and other things. There's a kind of a sadness in it. Of course, we work on the decommissioning too.
There's no question mark. When you have a new build that demands more resources, more business, it's just bigger in the figures, new builds than decommissioning. We should not forget that we as Bilfinger in the nuclear sector are not only in the new build and the decommissioning. We actually offer waste treatment. We offer special solutions. For example, in Germany, the nuclear waste deposit Asse, that mine site where we deliver the technology to take older barrels and other things out of the mine site to treat them different. We are the ones building a prototype for fusion, nuclear fusion reactor, the new technology in it. We are actually in different areas in that business. A new build of a nuclear power plant is always that capital intensive that it's in our top line, the bigger part of the business.
Thank you, Thomas. We have a question from Gerard O'Doherty, also from Metzler Bank. Should we still assume large-scale M&A is most likely to be in the U.S.A? You have previously stated a few larger U.S. businesses are on your radar and that you are undertaking comprehensive due diligence by U.S. to avoid missteps. Could you provide us an update on your strategy and willingness to move on M&A opportunities?
We do that. We have no change of that. We are conservative people. I think we can say that. You see that with the guidance and whatever. We look for a larger one in the U.S. and we look for a larger one in the Middle East. We do bolt-on acquisitions in Europe, as you saw, Nordic Mechanical Solutions, for example, a few weeks ago. We do that. If we take something on board in a larger scale, it has to work. It just has to work. That is what we look into. What is it, what we mean? It has to work. It has to cover a market which is where we have competence in. It has to cover a market in the U.S. where we have good management teams getting into the company with good customer relations. That takes time to look into.
We have a good example of how positive that can play out. The acquisition of Stork was not done in three months. It took quite a long time, more than one and a half years, if not longer, to look into. It actually came out positive for us as Bilfinger and very positive for the people in the former Stork, now Bilfinger Group. We are very happy about that. Of course, we look into that we have in larger M&A transaction that we do something which adds a shareholder return. This is for us number one importance.
Thank you very much, Thomas and Matti. There are no further questions. Thank you all for your active participation in today's call. Our next financial calendar event will be the publication of our Q3 results on the 13th of November. As Thomas said, please also already note the 2nd of December in your diaries for our Capital Markets Day. As always, if there are any remaining questions, please reach out to me or the Investor Relations team. Thank you very much. Stay healthy and goodbye.