Good afternoon, ladies and gentlemen, and welcome to Bilfinger's Q3 2026 results call. Thank you for joining us today. My name is Martina Kalkhake, and I am responsible for Investor Relations at Bilfinger. I am joined today by our Group CEO, Thomas Schulz, and our Group CFO, Matti Jäkel. We will start with a short presentation of the performance of the quarter and will then open up the call for your questions. You can, as usually, ask your questions via telephone or via chat in the webcast, and I will read them out. During the presentation, all participants will be in a listen-only mode, and the event will be recorded. I will now hand over to Thomas. Thank you.
Thank you very much, Martina. Hello, everybody. Let's start directly with the highlights out of the Q3. We are still in a quite volatile market with significant regional differences in business activity and decision-making process on our customer side. Our order intake went up in the quarter, 25%, organically 21%, and actually is the second quarter in a row with quite a good over-performance in the order intake. When we then look into the revenue, the revenue grew by - 1%, organically - 5%, and is, of course, significant below that what we expected for the Q3 and for the second half of the year. With that, our EBITA dropped to 4.6%. With this, the earnings per share went down to EUR 1.16, but the cash flow holds up quite well and actually grew from EUR 71 million to EUR 76 million.
Our outlook, what we gave in September, is confirmed with a revenue EUR 5.3 billion-EUR 5.7 billion and an adjusted EBITA margin of 4.6%-5.0%. Program Agile, which started, is on track. Before we go into the markets and the figures, some general information for the company and the importance of the company. Safety is here one of the major items because it is the entrance into the sectors where we operate in, and with our generally good safety track record, we are definitely one of the main positive drivers in the sectors we operate in. When you look on the two indicators, the TRIF and the LTIF, you see a slight increase versus the quarter before, and in the TRIF, a slight decrease to last year.
Our ambition is zero incidents, and it is one of the main things what we discussed with customers daily, how we perform together to improve to reach our ambition, which is zero incidents. When we then look into the markets, and I said it at the beginning, we have quite a volatile and in region significant differences in the different industries we operate in. On the left side, you see the production index, indexed to 2023, and with an outlook to 2030, which is in line with that what we communicated on the midterm targets range. When you look into the different color code, the first one I would like to explain is chemical and petrochem. It is the grayish line what you see. It actually shows the least growth potential up to 2030, and that is what we see in our business, especially this year.
The demand for chemicals and petrochem is not on a good level and slightly down, in line with that what we communicated actually before. The outsourcing demand is okay-ish, but not growing. What is the reason for it? We have quite good growth markets like in North America, parts of Europe, and the Middle East, when we have on the other side, like in Germany, a situation where customers are producing based on the supply shortage out of Asia quite a lot, and a lot of activities are postponed. But the potential what we see and the way how the market is established is actually not a structural change because the market as it is, we see for quite a while, one to two years already, as we communicated on the Capital Markets Day last year in December. A positive highlight for us, of course, is energy.
It is the blue line what you see on the left. It went down in 2025, but has a relatively good growth projection up to 2030. The main drivers is actually the increasing demand for generation, storage, and transmission throughout all areas we operate in. The outsourcing potential is good, and the demand is really good. When we look into chemicals and petrochem and energy, it was and it is and it will be the task of the management to transform Bilfinger from before very much heavy on the chemical and petrochem more into the energy and in other industries. In 2022, we were around 30% on the chemical and petrochems. Now we are around 20%, and energy was exactly vice versa. So that transformation works as we wanted to have it. The third industry is oil and gas, and there is a lot of talk about oil and gas.
It is the black line on the left side. And you see growth potential, especially 2027, 2028, is not looking too bad. That has to do with the Iran war and, of course, the demand what we see, not only we as Bilfinger, our customers by far more, the refill activity what we have in Asia and getting a full supply line established when Iran war and Iran war concerns are gone. When we look into the demand for us, it is a good demand for Bilfinger all over areas, but with regional differences. It makes around 20% of the top line. The outsourcing potential, the potential where customers give us more than normal maintenance, where they give us departments, complete areas in the plant for an unlimited time, is actually good.
Then we come to the fourth, it is the green line, the most positive what you have in the production index picture on the left side. This makes around 10% of our top line. The demand is good, the outsourcing potential is good. But we have quite different regional situations, whereas North America, Middle East, and parts of Europe performing quite well, whereas Germany is at the moment subdued based on some political decisions and with that investment decisions of the major customers. Out of that, we go into some of the orders what we received. And on the left side, I would like to highlight out of the Netherlands in oil and gas for Zeeland Refinery, an order what we got for engineering, prefabrication, and installation of boiler with integrated instrumentation.
The real important part is, it is not only to improve the efficiency, it is actually the main target of the customer to improve sustainability significantly, what we can arrange. In the mid part, it is the energy from EDF. It is on Hinkley Point, it is engineering, procurement, piping, prefabrication, and installation for critical reactor systems. We are a big supplier. We are quite a large company into the nuclear industry, and we work with multiple customers in that area, and it is an area in the energy sector which is growing. When we then look to the right side, it is a chemical and petrochem order out of Poland. It is prefabrication and installation of pipe work, and here the same as in the Zeeland Refinery case, clearly to optimize the efficiency of the piping system in that chemical plant. Out of this, we go very short into our innovation run.
It seems to be that this rack cleaning machine is a simple thing, but when you see which kind of impact it has on safety and maintenance, it is actually a core equipment and core installation, fully digitalized and automated to help and to support customers, and with that, us to make a 24/7 maintenance and avoiding any so-called debris which goes into the water flow in a hydropower plant. That is a big thing for our customers on that side, and with this installation, we are able to offer the clients a solution which is without interference of humans, working 24/7 to avoid these situations which definitely decrease then the performance of the whole hydropower plant. Out of that, we go into the figures, and with that, we always start with the opportunity pipeline at first.
When you look to the right side, the blue bars on the upper left corner of the slide, you see that the quarter three actually developed very well and very favorable throughout all segments in the opportunity pipeline. The opportunity pipeline gives us the indication how much business will come and how much we see the possibility to get the order. A part of that, what you see here in the opportunity pipeline, is actually that what we did not get in the last few months based on the lack of decision-making, mainly out of the Iran war. Most of that, what we debated for quite a while and short notice, is actually not canceled, it is actually postponed, and you see that in the opportunity pipeline.
When we further look into the opportunity pipeline throughout the whole year, you see that we have that improvement situation actually since the end of quarter one, ongoing more or less straight up. That is for us and for our customers who tell us that and give us that information, a clear indication that the willingness to invest, the willingness to do the different activities is definitely there and will come, only time-related. When we with that then look into the orders received, we again had quite a good order intake with EUR 1.7 billion, and as we announced days or weeks ago, it is one larger order in it, and that is what we had last year too. When we look into last year, the quarter two, it was quite a high, was actually the highest order intake with close to EUR 1.8 billion. Now we are with EUR 1.7 billion, the second highest.
Actually, quarter two this year is the third highest order intake in the last 10 years for Bilfinger. You saw in the quarter two 2025 some larger orders, and as you see, they are now going more over quarter two, quarter three. Up to the end of the year, we are in a positive outlook how the order intake for this year for Bilfinger will develop. With that, of course, with that increase of 21% organically and 25% overall, we have an order backlog increase of 6%. When we then look into the figures, then I give to Matti, our CFO.
Thanks, Thomas. Good afternoon. Let's take a look at revenue and profitability. The Q3 numbers are in line with our updated outlook, but I can assure you, they are below our expectations and certainly below our ambition. So we delivered EUR 1.36 billion in revenues. Given the very good order intake, the book-to-bill increased to 1.25x. If we, for a moment, remove the large extension of this contract out of the order intake, then the book-to-bill would be 1.0x for the quarter. Gross profit declined by 13%. The gross profit margin went down from 11.3% to 10%. Here, all the effects that we have discussed at various occasions in the last few weeks play a role. Significant delays in CapEx and OpEx spend or investments cause underutilization of our own capacity. The product mix is less favorable than the year before.
What we are missing are call-offs for more complex and higher-priced services. On the SG&A, we continue to apply and maintain a very rigid cost discipline. In absolute terms, the number went up from EUR 80 million to EUR 84 million. This has to do largely with the addition of Teknokon, starting in the second quarter of this year. We have spent some more money comparatively to last year on M&A due diligences and work to speed up our M&A efforts. So the drop in gross profit percentage falls pretty much straight to the bottom line, and hence the EBITA is down from 5.8% to 4.6%, again, in line with the updated outlook from the middle of September. Most of the decline, and we will see that when we go through the segments, is concentrated in Central Europe. Into the segments, starting off with Western Europe.
Orders received is down by 22%, 23%, quite a bit compared to last year's third quarter. Again, we see the effects of the hesitancy on the customer side, delays in making investment decisions on the one hand side, but also we have some larger contracts that are nearing or projects that are nearing completion, and there is fewer and smaller follow-on contracts, which leads to the lower orders received and also to a reduction in the revenue by 9% from EUR 457 million to EUR 460 million for the quarter. Our segment Western Europe demonstrates quite a good resilience, and they are in a good position, and they are more flexible to adjust to those changing market conditions and revenue conditions. They maintained their profitability or even increased it slightly from 6.3% to 6.5%. So there, we are in a position to adjust more flexibly to what is changing in the market.
Both on orders received and in revenue, you see what Thomas alluded to earlier. We see decline in oil and gas, chemicals, and petrochemicals, both in orders received and on the revenue side. On the other side, we see then increases in pharma, biopharma, energy, and also adjacent industries. Moving on to Central Europe. Orders received up almost 50%. Why is that the case? The large order in energy generation is included in Central Europe. That adds to the orders received in this quarter on our books. Revenue is down slightly by 2%, where we see growth in oil and gas and chemicals and petrochemicals. You would say that's quite surprising, but it really depends on what our contract mix is in the various quarters. Profitability is down. As I said earlier, the decline here is concentrated in Central Europe.
The delays in CapEx and OpEx investments, the underutilization, the product mix really are a burden on gross profit, while we maintain a very rigid SG&A discipline here. Finally, in international, orders received are down slightly by 2%, organically by 13%. As we footnoted here, the Teknokon Group financials are included here. That makes the difference between organic and absolute. Revenue in organic is flat. With the addition of Teknokon, we're up 5% to EUR 275 million, and the book-to-bill is almost at 1.0x, 0.97x to be specific. Despite the geopolitical situations in the Middle East and Eastern Europe, meaning Ukraine, profitability declined by EUR 2 million on the revenue of EUR 270 million. That's from 5% to close to 4%. Given that we have significant external factors working here, that's a good performance by our international people.
That translates into a net profit of EUR 43 million compared to EUR 55 million last year, and on the earnings per share, EUR 1.16, down from EUR 1.47 last year. In between EBIT and net profit, nothing much has changed. On the lower earnings base, we have a lower tax expense by EUR 5 million. The tax rate was also 2 percentage points lower than in last year's quarter, but I think we have shared that with you already a few times that the tax rate fluctuates depending on when are we recording taxable profits where. Over to cash flow.
Free cash flow at EUR 76 million for the quarter, and the cash conversion rate of 121%, which is quite a bit higher than what we are targeting typically, but we had a couple of contractual settlements where we have been in dispute with customers, and we settled them successfully, and some of the money flowed into our bank account in the third quarter, pushing up the cash conversion rate. We've seen some catch-up effects in working capital, as we had communicated before, from quarter one and quarter two. However, as you see under net trade assets, over revenue, the percentage remains higher than where we want it to be at 9%. This has to do with the fact that work in progress started to increase in the first and second quarter, and we haven't managed as yet to bring the work in progress exposure down.
We expect this to improve substantially in the fourth quarter. That is also an area of intense focus throughout the organization. Net cash at EUR 68 million, or net liquidity, I have to say, EUR 68 million. The jump from quarter two to quarter three has to do with the promissory note loan that we issued early September. EUR 300 million went into our bank account, and EUR 300 million was added to our debt. That is the movement that you see here. Everything else is in line with what we projected. Net debt to EBITA follows the usual pattern, goes up a little bit in the second quarter, and then comes down again in the third quarter. Nothing out of the ordinary here. With that, I turn it back to Thomas. Thank you.
Thank you, Matti. Now to Program Agile. Program Agile was launched when we gave the new guidance for the year 2026 in September, and it is already in operation, and I will show you where and how that can be, because it is the acceleration of strategic activities, what we in the majority planned up to 2029, 2030. The highly volatile market, in specific, the Iran war, forced us with the customer behavior, what we saw, especially in September, end of August, September, to enforce these strategic activities so that we get a more agile organization. As you saw, when you listen to that, what Matti said regarding Western Europe and the agility that the colleagues created a higher EBITA, no matter that they are faced with customer delays and decision-making delays too.
It is clear that the focus of the Agile program is very much on Central Europe, and in that case, on German-speaking countries. What are we talking here in specific? We had, and we did that, and we will do that in the future too, to exit sites, customer sites, where we see for our business and our offering not a great future, and to build up new ones. That is actually a normal behavior, what we do in the business. It is part of the business model. Based on the situation, what we saw with the temporarily quite impact, we accelerate that. On top of that, we use that, of course, to consolidate our locations, to make out of a lot of smaller ones, bigger ones, as well as that we combine in the next step, the Global Consulting & Engineering part to have one global organization.
We started with that, if you can remember, beginning of this year by combining Western and Central Europe in that area, and we go the next step in our Global Shared Services . On top of it, smaller activities which are part of our strategic levers. All of that is based on feasibility, viability, and leverage. What we do is we have, of course, a midterm view up to 2030 on all of these activities, and we know what we have to bring to the bottom line. What we bring to the bottom line, what you will see then full-time effect from 2028 on, is EUR 75 million. The cost for it is EUR 75 million.
That has to do that, and that's the pity, that based on the timing and the short timeframe what we have available for getting more Agile in specific Central Europe, we will reduce capacity up to 1,500 FTEs. Negotiation or consultation with the social partners in all the areas where necessary and not necessary are ongoing, and we see that the execution will be throughout the year 2027 in a very organized way, as you know it from the Efficiency Program. Then we will see the full-fledged, for example, Global Shared Services activities beginning of 2028. What does it mean? It means that we each quarter report the following slide, what you see, with the EBITA improvement realized in that quarter we report on, as well as the one-time cost. On top of it, the capacity reduction, and then our progress on the consolidation of locations.
There we will give the amount of locations is the KPI. Then the Global Consulting & Engineering to grow together into one organization, as well as the next step in the global shared service development. As you see, you see on the capacity reduction already some movement as well as on the three following ones, and that has to do that we are, of course, going into strategic priorities, what we are already working on, and of course, with the acceleration, you see, of course, the first percentages realized. So, as with the Efficiency Program, we will have some of the improvement in 2027 on the bottom line, but full-time improvement in 2028, and the reporting will be crystal clear on how much money we spend and how much we bring to the bottom line in each quarter. Out of that, we go to the outlook.
The outlook what we gave in September for 2026 is confirmed with EUR 5.3 billion-EUR 5.7 billion for the revenue, a 3.2%-3.6% reported in the EBITA, adjusted 4.6%-5.0%. That's, of course, the provisions and the money for the Agile program with the EUR 75 million, the difference, and a free cash flow range from EUR 180 million-EUR 220 million. With that, we see the 2026 not as a new starting point in our company history or for the strategy. It is actually not good performance what we have in 2026, and in 2027, it will be, of course, better, and then we are going back on track towards our 2030 targets, what we have, and which are confirmed. Out of that, short summary on the highlights. Volatile market environment with quite significant regional differences. Order intake up 25, respective 21%.
The revenue in the quarter three below that what we actually expected in the first half of the year with -1% , - 5%. EBITA margin on the 4.6%. Earnings per share, EUR 1.16. Cash flow up to EUR 76 million. Program Agile already started and on track, and the outlook for 2026 confirmed. With that, I give back to Martina.
Thank you very much, Thomas and Matti. Ladies and gentlemen, you can now ask your questions via phone by pressing star and one on your keypad or via chat in the webcast. The first question is on the telephone line from Craig Abbott from Kepler Cheuvreux. Craig, please go ahead with your questions.
Yeah, thanks, Martina. Good afternoon, gentlemen. Just a couple from my side, please, to begin with. Western Europe, you've pointed it out, that's where you've seen a very significant decline throughout the year in your order intake, as your two biggest end markets there, oil and gas and chemicals, have been very weak. So I just want to ask you a two-folded question here for that division particularly. How do you see those end markets developing going forward in the next few quarters based on what you know today, obviously? And with that backlog coverage continually declining throughout this year, should we realistically expect any top-line growth in that division next year or maybe a decline? But if you could maybe give us some color on what you're thinking about the revenue year-on-year comparison in Western Europe in next year would be great.
The second question is at the group level, looking at your current order backlog, and let's leave out the Hinkley Point project, please, how do you see the profitability quality of that backlog being as it feeds through the P&L to a large extent in 2027? Thank you.
Thank you, Craig. I start with Western Europe. As you rightly say, and what Matti, of course, presented, it's a low order intake for the quarter three. What is triggering that? We had actually quite a relatively high order intake in the quarter two, so there you see volatility. Second, we see, of course, in Western Europe, especially in Belgium, Netherlands, some hesitation on customer side, as we have it in Central Europe too. Very often similar customer or same customers. Then on top of it, we have some of the larger orders coming to an end, and then, as you know, renewal comes, and then order intake starts again to go up. So it's a mix in it. In that case, a little bit a negative mix. When we then look forward, we are actually positive on the outlook in the growth development for Western Europe.
We see there mainly a shift into other industries, energy, adjacent industries, where a lot of activity, actually data center, quite a lot of that comes up in that area or that part of Europe, and that's the reason why we are not concerned about Western Europe. Then if you take with the order backlog, Matti.
Yeah, you asked year-over-year revenue development for Western Europe 2027. Well, that's something that we're working on as we see the orders coming in this year, particularly quarter four, so it's a bit early. As you all know, guidance for 2027 will be given early March when we close out the year together with you guys. Backlog profitability remains quite good. With the order intakes that we have, we maintain the profitability there, the contribution margin one or two, or gross margin on those contracts. Some show improvements. That's also part of our Program Agile, and something we do continuously is work on improving gross margins on our contracts, be it on the ones that are already in backlog or when we price new opportunities into the market. So we haven't seen any significant decline in quality of backlog.
Okay. Okay, that's very helpful. Thank you.
Thanks, Craig.
Thank you.
Thank you. We have further questions on the telephone line. The next question is from Olivier Calvet from UBS. Olivier, please go ahead.
Yes. Hi. Good afternoon. Thanks for taking my questions. I have three. In your opportunity pipeline, I assume some of the increase we see at the end of the quarter reflects the strong order in energy in Central Europe. Adjusting for that, would it be fair to assume the opportunity pipeline in August, September remained rather broadly level? That would be question one. Then also coming back on that energy order in nuclear, which you booked in the Q3 order intake, can you just remind us whether this is a contract renewal or extension? Should we assume the revenue run rate to be in the range of EUR 100 million or so per year for the next three years from 2027? Then the third one would be just on the free cash flow on your definition. Normally, your fourth quarter is a good quarter.
Just curious what needs to happen for you to reach the low end or even the midpoint of your guidance, given, if I just take EUR 35 million in Q4 or even at the midpoint, EUR 55 million, that is, I think, if I am not mistaken, quite low relative to the past few years. Just a little bit of more color there. Actually, sorry, a fourth one would just be on the implied Q4. I think you maintain your guidance on the segment level as well. But just comparing year-to-date performance versus the outlook for the year, I think you are a bit above the guidance in Western Europe in terms of margin, a bit below in Central Europe. Just curious as to whether there is any reasons to expect an improvement in Q4 sequentially on the margin in Central Europe and a deterioration in Western Europe. Thanks.
Thank you very much, Olivier. The opportunity pipeline, when we have larger, what we always have, larger deals in it's never in that amount of money in the opportunity pipeline as then is awarded to us, because we judge it on how much is the likelihood that it happens and how much we get. In that case, the energy order is not really, didn't move the opportunity pipeline at all. What moved the opportunity pipeline significant more up than normally we have 5%, 6%, 7%, 8%, 10% maybe, has to do with the postponing of expected business. That's actually the thing. We have things in the opportunity pipeline for months which are normally already in order intake, which is one part of the underutilization what we were faced with and hitting us this year.
The argument that what we could hear that orders or business what we had in the pipeline disappeared and will not come back is just not true. The opportunity pipeline shows quite a good run. It's not the Hinkley Point part. Then to the Hinkley Point part in itself, we always have extension orders, always. That's regular business. It's not extraordinary. It proves that we have a very good offering to the client, that the client is very much appreciating us and giving us more responsibility. Yes, this is a little bit a larger one, but last year we had similar things in it. Actually, the quarter two with EUR 1.8 billion contained multiple extraordinary events. We always had some extraordinary events. This time it's an extraordinary in the quarter three. We see that more from a year-to-date point of view.
When we then look into the revenue, your guesstimation is fairly good and spot on as you described it.
Free cash flow fourth quarter, yes, EUR 55 million to sort of get it to the finishing line on the midpoint. Typically, the fourth quarter is a very strong quarter. However, we have seen some money flows already in quarter three, and we're sort of cautious on the cash flow because we have seen quite a bit of a volatility throughout the year. So, we're very much confident that we get to the midpoint, which is EUR 200 million. Should things improve and go better, we'll take it. If things don't improve, we'll work harder, yeah? That's for sure. But we're very confident to hit the midpoint there. On the implied quarter four performance, I start with Central Europe. For Central Europe, we're expecting sort of a normal quarter four, which we have had in the last few years, which is around 5.5%-6%.
In Western Europe, there shouldn't be much change for the fourth quarter. We'll see how that comes out and how well we perform the contracts. But again, we're talking small numbers, EUR 1 million or EUR 2 million really move the percentage points quite a bit, that is how we look at it.
Thank you.
Thank you, Olivier.
Thank you very much. We have further questions on the telephone line. The next question is from Andreas Wolf from Berenberg Bank. Andreas, please go ahead.
Yeah. Hi. Congratulations on the strong order intake in Q3. Most of my questions have already been asked. I have a few left, or just minor questions left. I'm trying to understand the opportunity pipeline. The 110, 123, and 127 level that was shown on slide number seven for July, August, and September, that basically is your expectation or translated into order entries in Q3. Is this correct, or does this give an indication also for Q4? I'm trying to understand it. Further to the opportunity pipeline, what does it look like, or what may it look like for Q4? Is there potential for winning a large order as you did in Q3? Then just to better understand the segment reporting as well, if I'm not mistaken, I think reconciliation revenues were around EUR 29 million in Q3. Could you comment on that as well? Thank you.
Thank you very much, Andreas. The opportunity pipeline shows what we take as a business out of the market, what we see, where we can bid on. That is the first step. Then it goes into the opportunity pipeline. To give an example, if a steel plant would announce, "We want to invest in this and that," and we as Bilfinger have some products on it, then our people would put that into the opportunity pipeline and judging what is the likelihood that we can get an order out of it, and what is the likelihood that it really happens, that the customer realize it. We call it the go, the to go and to get judgment. All of the possibilities, all of the opportunities, all of that business we put into the pipeline.
In that pipeline, we can then track what we are bidding on, how far we are in the bid, what competition is, and what the likelihood, as longer as it goes in the opportunity pipeline, how the likelihood that it happens and that we get it is developing. That is a fairly simple system. What you have in other industries like construction, mining, already in for quite a while, and it should give you in the market actually a view into a multiple year ahead of how the industries develop for us and for the products what we have.
By saying so, you have, of course, when you have such an increase, which looks good, but it shows that some of the opportunities what we put in quarter one, quarter two, actually didn't realize on customer side, the, how to say, the to go didn't happen, and with that, it stays in the opportunity pipeline. Which for us, and we know it by customer, by case, of course, is a clear indication that by far the majority of the business, which was postponed based on the Iran war and the really the full stop on decision-making in quite a lot of areas and industries in the middle of the year or predominantly in September, in a way as I didn't see it, I only saw it in mining once in my career, is actually still active and will happen. Only timing is the important part.
What is the potential for large orders? We have, of course, larger orders in the opportunity pipeline and in the work we do and what we bid and what we discuss with customers. But at the end of the day, the customer has to send us the order, and otherwise, it is not order intake. We knew, for example, in quarter one, quarter two, that we work actually already last year with our nuclear client on an extension on an existing order, and working that out, and things are, in some cases, just take time for approval and getting then the letter out to us as a clear order with advance payment and so on and so on.
Yeah, a number of contracts. The process is, the tender comes out, we develop our offer. Then there's a bid submission date. Sometimes the bid submission dates moves a month, two months, sometimes a quarter or two. Then the bids are being submitted, the orders are evaluated by the customer. Then follows negotiation phases. They're all on a very tight schedule, but then things move, yeah? We expect, and then we know the award date at some point in time. Let's say the award date is 30th of September , and two days before the 30th of September , the award date moves into the second week of October. We win the contract, but we don't win it in quarter three, we win it in quarter four.
That is very typical, but across the large number of opportunities that we have submitted and negotiate, these things just tend. They happen not on a schedule, but more arbitrarily, and that is why in some quarters we have three or four larger awards, and in other quarters we only have one, or not at all, just regular business. That is why order intake fluctuates. On group level, it levels a bit out, but if you start looking into the segments or within the segments into the business units, you can see some fluctuations or stronger fluctuations. I think your last question was on the revenue in the reconciliation column, so to speak. In quarter three, it came to EUR -23 million. What does it refer to?
The revenue there is the revenue that's generated when we work across segments on one order or one contract, and then both segments report the revenue, and we have to consolidate a portion so that we only show the revenue for this particular contract once for the total group. That's something that, if need be, Andreas, we can explain outside the call again and run you through the numbers.
Okay, got it. Thank you very much.
Or the systematic, yeah?
Yeah. Thank you.
Thank you, Andreas.
Thank you. The next question we have from the chat, from Nikolas Demeter from Bankhaus Metzler. I can read the question out. It is about the 2027 outlook. How do you see 2027? Should the year unfold as originally envisioned for 2026? In other words, similar margins, similar growth rates? Or should we still expect a somewhat subdued start in the first half of the year, which will then improve as the year progresses? What are you hearing from your customers? Are things slowly returning to normal there?
Yeah, let us start with the customers. To describe that a little, we saw a lot of hesitation to go on with any additional work or anything, as we reflect quite intensified in the last few weeks where that came from. That led actually to the situation that necessary work is postponed into 2027, some what we saw up to 2028. I will not go into details, but we had one special effect in especially Central Europe and Germany in chemical and petrochem industry based on the shortage. What the chemical industry enjoys out of Asia, actually the capacity ramp up in, let's take the German clients, was quite significant and positive to counteract on the supply shortage out of Asia.
That led to the fact that the planned work was then within days postponed into next year, and that, of course, we see then coming in the next year. To summarize that a little bit up on that what we see for 2027 will be a normalized year with the business activities. Some, how to say, impacts from the 2026 and Iran war can happen, but we see that customers are out of the stress, out of that pressure thing, step by step, and decision-making takes more progress. On top of it, we have some of the postponed businesses. Generally, we have a weaker first half versus a stronger second half. That's seasonality, which is partly weather-related and vacation-related. If you take the first quarter this year, on top of all what happened, we had a slow start based on a very strong winter.
Let's see how the winter comes. As far as it is predicted, should be better than last or better than 2026, means less snow, less ice, which would give us a higher activity level. So that is how we see the year 2027, more as a normalized way going forward.
Thank you very much, Thomas. We have further questions in the chat. The next question is from Egor Sonin from AlphaValue. It's on other operations too. Orders there were EUR 151 million this quarter against EUR 28 million last year, and the backlog has roughly tripled, but profit in that unit fell from EUR 21 million to EUR 5 million over nine months. What is this order, and is it at a fixed price?
All right. Thanks for the question, Egor. Other operations is, in essence, our South African business that we run as a non-core business. Our South African operation services coal-fired power plants for the national utility by the name of Eskom. That's their largest customer and has quite an influence on the numbers. We have a frame contract with Eskom that runs typically for three or four years. That contract was supposed to end at the end of last year and then renewed. When that happens, we reduce the backlog over time, over the last 12 months, to pretty much zero. That is why the order intake was very low in 2025. The contract was then extended for six months. They had a tender process out.
That tender process was then canceled. Consequently, mid-year, the existing contract was extended until the end of 2027, which, by the way, we report order intake and order backlog, we had to sort of bring it back up. That explains the huge order intake in 2026 year-to-date versus 2025. On the profit side, last year was an extraordinary year with lots of shutdowns and turnarounds. Eskom is funded by the state, or by the state government, and they had to spend a lot of money because they didn't invest enough in maintenance prior years. We were in over-absorption for most of 2025, and 2026 was back to a normal year where the profit levels are then lower.
In addition, we have performed a larger project outside the energy industry. That project didn't go as well as we had planned, so there was a bit of an impact on the profitability there. Again, effects that span not only one year, but two years on the Eskom side, and the other project is being completed as we speak. Question for next year is, how do we see it next year? Again, a normalized year with good performance.
The reason why we can be so detailed is it's all public knowledge.
Yeah.
That's the reason why we can speak completely openly about it.
It's not one order, it's a frame contract, and it's time and material, and it's not fixed price.
Thank you very much, Matti. On the chat, the next question is from Pal Skirta, from Bernstein. "You described the EUR 75 million Agile benefit as a gross EBITA improvement. What is the expected net benefit after wage inflation, subcontracting, implementation effects, and other leakage?
Yeah, I saw that, what you wrote and what you now here with the question bring to. When you look, and I have a good example, is the Efficiency Program. In the Efficiency Program, we had the same way of doing. It was not only a pure cost cutting, it was actually reshuffling, partly investing. Actually, in the Efficiency Program, quite a lot of investment to lift up for the future. We have some elements in the Agile program too. So, it is when you look into what you call the net benefit, wage inflation, subcontracting, you will see the EUR 75 million as it is today in the bottom line of 2028 fully. Why can we say so?
Because we know our cost base and the cost development base, not only on the wages, on the locations, on the contracts, and on the business what we have in the different operations. I make an example. We were faced, and this year, with the situation that we actually expected significant higher revenue in the second half of the year based on customer information and promise and so on, that didn't realize. We had the people and the organization and the structure, you see it partly in the WIP, all prepared for it, and it didn't happen. Then you look into what is the flexibility, what you can run then to deploy the people into other parts of the business, and what we see is in some areas that is possible, that is what we do by building up new sites and getting into a Global Consulting & Engineering organization.
But in some other parts, we have to exit the sites because what we see as a future business is just with that what happened too low for us. We have not enough work, the overhead cost and everything would not bring us on an enough profitability level. I can say different. With all that, what we expect to add as efficiency improvement to the customer, we don't see that for the money what the customer has available, we can realize it. That is the shift where we then decrease and build up in other parts, and the net effect are 1,500. From our point of view, it's a speed-up of that what we already did, what you saw from the movement chemical industry, petrochem industry, more into energy. It's different locations too, by the way. That is what we speed up.
On top of it, when we look into the other parts, I take shared service. Since years, we work on establishing a standard of industry set up for a shared service center, and that movement, we now speed it up and push more. The bad thing in that is that we then have to lay off people, and doing that in a quick activity, and in some parts of the world, that is related with some cost. But the positive net effect, we actually calculated in up to 2030 already. It will come earlier in 2028.
Thank you, Thomas. We have a further question from the chat from Dara O'Doherty. The question is a reflection of conversations with investors in terms of understanding the true underlying cyclicality of the Bilfinger business. In terms of the underlying cyclicality of your businesses, what new elements do you think you as management team have learned this year? What element of the cyclicality surprised you? From any greater understanding, how will it influence your positioning Bilfinger for the future contribute to the Agile Efficiency Program?
What we learned is that we, in that what we had in the last few years, quite a good development quarter on quarter and improvement, very close contact with customers, and actually customers, what we planned for was getting realized in a timeframe that we could manage it. We always had some delays here and there, but not in that magnitude. From our point of view, if you can say so, the mistake what we did was actually that we believed too much into that what we saw in the market, what is in the pipeline, what has to be done, and we were prepared to do so, but it did not come. The learning out of it is that we were in some parts, I take now international, and partly Western Europe too, quite Agile to deal with that situation.
In some other parts, especially in Central Europe, we were not Agile enough. We had not the flexibility what we believed we would have in such a situation. Of course, we can say it was an extreme shift from all fired up, all pushing, and wanted to have more in shorter time to full stop, but that is not an excuse. That is what we misread in the market, and that is what we actually feel the most sorry for it. Maybe not as much sorry as that now 1,500 people as a total have then to leave the company to get that agility into the group again. When we look into the underlying cyclicality, the underlying cyclicality in our business lies predominantly in that what customer demand is, and the customer demand in the areas where we work is quite good.
We have in the Middle East as well as in North America a lot of new sites and new maintenance opportunities, whereas in Europe, there is a very aging population of plants where we work on it. But there is a cyclicality in it, what we always report on it. If larger and multiple larger contracts are running out, then you see it in a lower order intake, but actually it does not hit so much the revenue and our utilization. That was this year different. We will be more conservative in the view ahead how we build up resources for upcoming projects, which means we have to be more flexible, to be very precise in it. With a Global Consulting & Engineering organization, we are able to let all the work and all the people work on any project anywhere in the Bilfinger hemisphere, no matter where the people sit.
That we did not achieve, and we did not have that much as we wanted to have it. Second part in it is that our look forward with these extreme situations is sharpened. The KPI set is strengthened. The timing of controlling that and looking into that and approve different blockage of resources for special projects is changed in that respect, and the communication with customers improved a lot. We are sitting with clients and give them clear indication if they are not coming to that date exactly, then any further promise will not help, and we have the people not available. That kind of flexibility we built in with Agile. That is the reason why we call that the Program Agile.
It doesn't help to finalize that we had all these activities already planned and actually explained it on the Capital Markets Day in December under the strategic lever, Operational Excellence. Again, a mistake on our side, we didn't enforce it fast enough to get that Operational Excellence, and that was not good. That is what we now take care of, because our belief was that as we did in the last four years, that we have step-by-step time to make that transformation of the Bilfinger Group. Now we have to do it with time pressure and with additional cost, and that's the main pity, with a lot of layoffs.
Thank you very much, Thomas. We have a further question from the chat from Hugo Mas from Sycomore. Could you describe a bit the conversion rate of the opportunity pipeline over the recent weeks? Do you see any signal for better conversion very recently, or does it stay quite subdued?
Yeah. At first, from a feeling point of view, I have to say we are ultra-conservative at the moment, what we see coming. I think people can understand that. We see a better situation. It's not dramatic better, but we see a better situation than a few months ago. What happened in end of August, especially then September, was not what we saw coming. It was really like a tsunami what hit us, and that was not good. On the other side, a lot of customers contacted us to discuss with us how to build it up for the future better, because it's for them not positive too if we then would have not the people available. On the other side, the activity, the decision, or willingness on the customer side improved.
Thank you very much, Thomas and Matti. There are no further questions, so this concludes our Q&A session. Thank you all very much for your participation this afternoon, and if there's further questions coming up, please feel free to reach out to the Investor Relations team. Thank you very much and goodbye.