Good afternoon, ladies and gentlemen, and welcome to Bilfinger's second quarter 2020 conference call. With us today are Tom Blades, our CEO, and Christina Johansson, our CFO. Before we go to Q&A, Tom and Christina take you through some of the key highlights of this morning's release and provide a bit more color around financial performance in the second quarter. With this, I hand over to Tom Blades.
Thank you, Bettina, and also from myself, good afternoon. If I can pick up where we left off at the end of Q1, I think we guided you towards, obviously, a dip in our revenue. Our year-end guidance remains unchanged. I think the message here is that things are developing more or less the way we expected, even though we don't like them. We'll live through it, and we'll get through it. If I go into the headlines here, we are seeing some recovery. The markets, the signals we're getting, also our own top line is showing that. We saw slow activity in April and May, we see some pickup in June.
Okay, still a long way from where we were last year, certainly the bumping along the bottom has now turned into a very slow upturn, which we think will continue. We do expect further improvements throughout the second half of this year. Orders received in the quarter were -15% organically versus the same quarter last year. If you couple that with the first quarter where we were more or less on target, then for the year to date or the first half year, we're at -3% organically. The corresponding revenue, at -29% for the quarter. For the half, -19%. That gives us quite a strong book-to-bill ratio, obviously. That book-to-bill ratio of 1.2 positions us for a bounce back going forward. EBITDA adjusted, EUR -35 million. I think no surprise there. In line with the revenue drop.
We have been doing a lot of mitigational efforts and executing well on that, as you'll see as we go through this. I think the details, if you go further into numbers, will show that our losses are now more concentrated in a particular part of the company, and in particular, two underperforming entities and technologies where we began to implement strategic measures. I think you'll know what that means quite a while back, and we're well on the way to executing on that. Free cash flow was very strong, EUR 129 million reported. That's really a lot of internal work in managing the working capital, but also helped, of course, by the deferred tax payments and deferred Social Security payments by the government. Those payments are due at a later stage, so they're not eliminated.
Rather, they're deferred, and we expect to roll back or pay back some of those in Q3 and Q4. Our balance sheet or our financial position is sound. From what we see today, we do not expect a need for any additional financing. With that, as mentioned at the beginning, we do reconfirm our outlook for the year. That's 20% versus last year, yet a positive adjusted EBITDA. If we go into some of the underlying messages that we also have in our press release. I mentioned a quarter of past, present, and future activity. Let me show you what that means. I think you all followed our Hinkley Point developments. On the next page, we'll go a little bit more into detail on that to show you how those contracts turn into order intake. Again, a great well done to the team.
I think far exceeding expectations, again, as we'll see on the next page. With respect to the past, in 2009, we had that unfortunate accident in Cologne with the municipal archives, and that case has been dragging on for 11 years. It's been a difficult case. Very happy, very pleased to report that it's been concluded. Our share of the payment to the city of Cologne is EUR 200 million, all of that is paid by our insurance. There is no impact on our liquidity nor on our earnings. What it does mean, again, it's another project off the list that was distracting management's time. In the quarter, we also settled with our former executive board members. You recall this is the compliance case that had to go through the AGM.
The AGM approved the settlement, there is a P&L effect of EUR 17 million, which we did book into adjustments. Cash was received in July. Again, close the books on that. Another project that was distracting management time and attention. In terms of the future, I think a lot of what we've done, you'll see that also here in the numbers, positions us as a leaner, more agile company, not only in our SG&A, which is below budget, as Christina will show, also in the way that we've been able to reduce our headcount and give a second look at our underlying structure to, again, as I mentioned, position us as a more agile, cost-managed company going forward into 2021 and beyond. Regarding Hinkley Point, this chart takes you back a little bit to almost the same time last year.
On the left side, 2019. This is what we thought at mid-year 2019. We thought that by the end of the year, we would have signed contracts for more than EUR 250 million. On the second curve you see there, we began 2020 with actual order intake only around EUR 50 million. We have signed, in the meantime, contracts well over EUR 500 million. Those contracts are call-off contracts. Once we've signed, we wait for the customer to then call off the activities. Our accounting systems only recognize the orders once those call-offs have been made. If you look at that commitment, it adds up to more than EUR 500 million. The actual order intake effect this year to date, around EUR 80 million. Between now and the end of the year, another EUR 150 million. In 2021, EUR 250 million.
Although our order intake line is performing well, there is yet more to come out of the Hinkley Point contract. This curve, this is what's required to keep the project on track and on schedule. Give you a little more color on the overall market and beginning with E&M Europe. Chemicals and petrochemicals, this is actually our main market. It makes up 40% of our revenue. What's been reassuring or reaffirming to see is that our main market is in continental Europe, and that in that market, COVID has had less than 10% effect. We're quite stable, continuing Europe in chemicals and petrochemicals. Energy and utilities, also showing a slight uptick there. I think no surprise again on the back of Hinkley Point. Interesting to see that a lot of companies now focusing on ESG projects.
For example, projects to limit CO2 emissions, to sequester CO2, or even to go further and look at hydrogen production. The oil and gas, 30% of our revenue. We have been hit hard in the North Sea, the upstream market. I think we shared some of the numbers with you. We see 50% drop in revenue versus last year in that particular part. Major projects have been delayed. Turnaround has been delayed. On the other side, especially on the land side, other projects continue. On the downstream side, for example, our project with BP Gelsenkirchen continues as planned and is even expanding. Quite a mixed picture there, but we show red, and we show the arrows being flat. No immediate recovery, although within that, we have this mixed picture. E&M International. Chemicals and petrochem, again, a different picture.
In the U.S., projects are being suspended or even delayed, whereas in the Middle East, the expansion programs, the modernization programs do continue, in particular in Abu Dhabi, around Ruwais, and in Saudi, around Jubail. Energy and utilities, Middle East also now looking at alternate power. Nuclear has been on the agenda for quite a while, but also in Middle East, we're seeing more renewable power concepts. We're seeing some hydrogen electrolysis projects. Also there we see and detect the shift in terms of ESG appreciation. North America, I think as before, wind and solar. I think, as the economy recovers, especially in the U.S., we do expect the government to put money into infrastructure and to boost the economy through such projects. Oil and gas. For us, as I mentioned, it's been a hit.
The 50% in the North Sea, if I compare that to the U.S., we see about a 40% hit on our business there and a 25% hit on our business in the Middle East. Overall, you do get a mixed picture, as I said. Technologies. There, energy and utilities also driven by the Hinkley Point effect. We also see nuclear business continuing to perform. We do see new projects. Decommissioning does continue in Germany with additional projects, and we're well entrenched into that line of business. Pharma and biopharma. We're getting a lot of questions, are you seeing an uptake in pharma production on the basis of COVID? No, not yet. We're kind of late phase in that chain, although we do expect to see it later.
What we do see is that our customers are rethinking their supply routes and trying to be less dependent on China and on, let's say, supply chains outside of Europe. That may mean more investment back in Europe. I think that's the quick run through the markets and how we see things. I would pass it over to you, Christina.
Thank you, Tom Blades, and also welcome from my side. Let's have a closer look on the financials for the second quarter 2020, starting on page nine. Looking at the order intake, as already mentioned, we had a drop in the second quarter. We achieved 931 million EUR, which would be organically 15% less than in the same quarter last year. However, if we look at the comparable number year to date, after six months, we only organically are 3% behind, which is a very solid performance. Also if you then also add that that number only includes 80 million EUR from Hinkley Point so far. We have to say that we see very strong development in our base business. We see that we can partly adjust the volumes expected on the frame agreements and increase them, but there clearly still continue to be lesser order intake on the so-called larger project side.
Book-to-bill ratio, 1.2 in the second quarter, which is then giving us a strong position for the second half to start to recover, but also slowly but clearly building up order intake that will be generating net sales next year. As said, EUR 80 million from Hinkley Point included in the first half. For the second quarter, we had EUR 30 million of that EUR 80 included, and we are expecting to see around another EUR 150 million in the second half of this year, and then EUR 250 million following in 2021. Order backlog at the end of June, very stable at close to EUR 2.7 billion. Proceeding to page 10, looking at the revenue and profitability. As already mentioned by Tom, we clearly in June started to see some recovery, April and May being very rough.
The focus during the second quarter has obviously been to adjust to the volumes, reduce our cost, and prove that we have an agile organization, but also, of course, to have a strict cost management here. The group revenue in the quarter two fell down to EUR 793 million, 29% organically less than the same quarter in previous year. There were sharp drops, especially related to the North Sea oil and gas business, so Aberdeen and Stavanger, but also a clear decline in North America as our major large projects are clearly coming to an end. Adjusted EBITDA decreased down to -EUR 35 million. We had, due to the underutilization, a very strong drop in the gross profit as revenue almost overnight were reduced.
We tried to cope with the underutilization through the programs, especially in Europe, the furlough programs, and also to some extent, laying off people. As always, when you have these strong drops in a short period of time, you're always a bit behind. Special items or adjustments slightly increased. We had EUR 16 million of adjustments in the second quarter to be compared with EUR 15 last year. We had an increase in restructuring expenses due to COVID-19 and the lower oil price. This amount in the second quarter for restructuring was EUR 28 million. That was positively partly reduced by the effect coming from the settlement with the former executive board members, the EUR 17 million that came out of the settlement paid by the insurance P&L effect in June, cash effect in July. The special item for the full-year, after now have spent or booked EUR 25 million.
Sorry, not spent, but booked EUR 25 million to P&L in the first half, has now been increased the expectations for the full-year. Due to technologies, we believe that we are no longer heading for EUR 50 million of special items for the full-year, but more like EUR 70 million, which is a very close number to the number we had last year, EUR 72 million last year for special items. As I said, related to an increase in restructuring measurements in technologies. Proceeding to page number 11. Gross margin, as I mentioned, due to the underutilization, dropped heavily in the second quarter. We achieved EUR 34 million of gross margin, a percentage of 4.3%, is to be compared with 7.4% in the first quarter and 8.5% last year in quarter two. Year- to- date, we are at 6.1%. Looking then on the other side at the SG&A.
Here we were able to reduce the absolute cutbacks by around clearly what we had last year, but also below the level that we had planned for. You see that the number we achieved in the second quarter was EUR 73 million. That is to be compared with EUR 84 million in the first quarter or EUR 91 million in quarter two last year. Some of these additional savings, they are sustainable, we are clearly here targeting for this year to get to an SG&A absolute number for the full-year around EUR 310 million. That is around EUR 20 million lower than what we had planned. A part of that is not sustainable, something like EUR 320 million will be the true number going forward. As already said previously, we are targeting here to get below the EUR 300 million in the year after.
That plan is proceeding, we are well on track here. Proceeding to the three segments. Starting off with the largest one, E&M Europe. That has, despite the COVID-19 and the lower oil price, they have been able, in both quarters here, to be positive. The orders received in the quarter two was 11% organically below what we saw last year in quarter two. The book-to-bill ratio is 1.3, we clearly see here from June onwards that we are starting off to recover. We are quite positive in regard of what we will be able to achieve in the second half of this year in this segment. Revenue, rough minus 24% organically in the second quarter. A lot of that is related to reductions in U.K., in the oil and gas, onshore and offshore business. Also the Nordics with Stavanger and Belgium and the Netherlands.
EBITDA adjusted, still positive as I said. We had a EUR 4 million positive in the first quarter and now a EUR 2 million in the second quarter. Of course, we are benefiting from all the programs for furlough that have been put in place. Some of them with short notice in Europe. We are trying to use them to be able to compensate at least partly, for the revenue drop and the underutilization for this period of time. Coming to the second segment, E&M International. Here we had rougher developments. We look at the orders received. They dropped from EUR 267 million in the second quarter last year down to EUR 131 million this year. That is an organic drop of 46%. A lot of that is related to North America, where we have not been able to win the large projects that now clearly are coming to an end.
Also Middle East, that has been in a lockdown and some countries still being closed for us to get in. Revenue reduced then too, with a little bit more than 50% in the second quarter. Also here, most of that related to North America. It was partly expected, because we had a low order intake last year. Of course, with the COVID-19 and the lower oil price, the implications were larger than we a couple of months ago expected. EBITDA adjusted, clearly negative. We see we made a small loss in the first quarter. Now we have a loss of EUR 12 million here in this segment. It says the underutilization, even if we have laid off, both in quarter one and two, a lot of people in North America, and we have been trying to adjust our capacities.
Obviously, in both regions, Middle East and North America, we haven't got access to the European kind of programs for furlough. The outlook is, in regard of revenue, a significant decrease. We are still expecting in the second half to be at EBITDA adjusted positive in E&M International. The last segment, technologies. Orders received, they were rising slightly, so 3% organically up to the level of EUR 114 million. Here we have a part of the Hinkley Point order intake going into the books. They are sharing this with E&M Europe. We are also expecting here in the second half to see further improvements from Hinkley Point. Book-to-bill ratio at 1.1. Order book backlog increased by 17% organically. The revenue reduced down to EUR 108 million, which is organically a reduction of 20%.
Of course, impact coming from COVID-19 restrictions, especially in Austria and France, where we had at least for two months, quite a strong impact coming from lockdowns. Adjusted EBITDA, we had a -EUR 20 million in the second quarter, -EUR 5 in the first. A strong reduction in the profitability here as we had a lot of temporary underutilization, but also due to two underperforming legal entities and technologies, where, as Tom mentioned before, we have taken, already in the first half this year, strategic measures to make sure that the second half will be stronger here than what we have seen in the first half. The outlook for the full-year is a slight decrease in revenue. EBITDA adjusted, a significant improvement, a positive improvement in the second half. However, in total for the year, we will have a negative EBITDA adjusted in technologies.
We proceed to the cash on page 15. A very robust cash flow thanks to active working capital management, but also helped by deferred tax payments and social security contributions. We have a very sound financial position and no additional financing needs expected. Looking into some of the details. Net profit, we are at -60. That decreased substantially, of course, mainly due to the lower EBITDA adjusted. The cash flow development being an upside here, the combination of being able to reduce the working capital as the sales went down, but also are using all the programs that a number of countries in Europe have put in place, which you've noted, to defer taxes and social security contributions. These two elements have helped us to continue to have a strong cash flow generation.
As mentioned, some of these programs for deferring taxes and social security will come to an end at the end of September. Some will continue in quarter four, and we have a couple of countries that, even at this point in time, have promised that we can wait until next year to pay. Obviously, some of these rules are changing as we are proceeding, but we will expect to see that most of these payments that have been deferred during the year will be settled the latest in December this year. DSO, we are here now at a similar level as in March. We have 88 days versus 86 days in March. Yes, we have reduced substantially the net trade assets. We have reduced the net trade assets with EUR 73 million versus March and EUR 160 million versus June last year.
However, not at the same speed as we have reduced revenue. Therefore, the DSO is with 88 days, still as high as it is. DPO, we are at 67 days. Also a comparable number with the situation as per the end of March, 69 days. Slightly better than in June last year with 65 days. Net liquidity, including IFRS 16 liability, improved from EUR -199 million at the beginning of the quarter, to EUR -108 million as of June 30th, 2020. Measures in place to safeguard liquidity also going forward. The quarter three will be the stress test for the liquidity after having the lowest revenue and profitability in the quarter two. None of our financing instruments has a maturity earlier than 2022. We feel comfortable that we will also manage this situation going forward. Now back to Tom Blades with the outlook for 2020.
Thank you, Bettina. Again, if I summarize, revenue is down, but in line with expectations. We think we're through the bottom and will begin climbing slowly back up. Order intake has been good, 1.2 book-to-bill. We have a cushion going forward with Hinkley Point , so we think we're also there, positioned for the bounce back. We have the same cash flow, same cash development and balancing, which means that we're financed through this difficult period, and we're confident. For that reason, the outlook hasn't changed. We remain on what we told you at the end of Q1, in fact, in May. A decrease of 20% year-on-year on the top line. Nevertheless, EBITDA adjusted will be positive and free cash flow reported will also be positive. With that, I would hand back to Bettina, and looking forward to your questions.
Yes. Thank you, Tom. Now we're ready to take your questions.
We would now be happy to take any questions you may have. If you would like to ask a question, please press zero and one on your telephone keypad. To withdraw your question, please press zero and two. First question comes from Gregor Kuglitsch, UBS.
Hi. Can you hear me?
Okay.
Hello?
Mr. Kuglitsch.
Can you hear me well?
Yes. Now we hear you. Thank you.
All right. Excellent. Just a few questions. The first one is, maybe they're kind of related. If you just quantify the benefit from furlough in the quarter, and also, related to that, the cash deferral element. Potentially, how much did you defer and therefore expect to unwind in H2? Then, can you just maybe elaborate a little bit more on the technology situation? I'm not sure whether these are the same businesses or same legal entities that were issues before and basically things have just intensified, or if there's basically new ones. I guess when you say strategic measures, what precisely are you doing? Are you shutting these businesses down or are you just restructuring? If you could just give a little bit more color, that would be helpful. Thank you.
Good. Let's take the first question in regard of the benefit from furlough. We obviously measured the benefits for the first six months, but obviously most of that is related to the second quarter, maybe one or two weeks to some extent impacted from March. In total, we have EUR 25 million of benefits that we have granted in the first six months. We are expecting that we will have around another EUR 5 million still to come. That is mainly related to the Netherlands, where the rules around the furlough, they will require also that the auditors at the end of the year will approve the way we have calculated it. EUR 25 million benefit coming from that in the first half, another around EUR 5 million still to come.
This is, of course, based on that the rules will continue to be in place, and also based on our forecasted number. Looking at the deferred amounts coming from social insurances and taxes, we are talking about a double-digit million amount here, at the higher end. That is as far as I can say to help you with the cash flow. It's a substantial amount. Double- digits million amount, at the higher end.
Got it. Thank you.
If I take your question on the two entities and what do you mean by strategic measures. I think we also mentioned earlier on here that the scrubber market has gone to zero. No surprise there. The differential between high sulfur and low sulfur is less than $50, meaning that the payback on a EUR 2 million scrubber investment has gone from 15 months to something like seven years. At the same time, tank utilization rates, vessel utilization rates have gone down. Customers are not only withholding their orders, they'd like to, in some cases, cancel existing ones. We are ramping that business down. That's one strategic set of measures. The other, I think no surprise, we're looking at the possibility to sell, in inverted commas, the entity. We have taken advisors.
That process is in progress, and therefore, we see a finite end to both of those situations.
Thank you.
Next question comes from Stephan Bauer, Metzler.
Thanks for taking my questions, and good afternoon from Frankfurt. A few questions. My first question is that you say that in June there was a slight improvement in your sales performance. Can you quantify the exact decline in sales compared to the previous year in that month? My second question is regarding the tax rate, if you can give the indication for fiscal year 2020. My third question is related to your oil and gas business. I think you were focusing a 5% CAGR for this business field before the pandemic in your strategic update. I think this growth assumption is no longer realistic. What is your new growth outlook for this business area from a mid to long-term perspective? Do you see potentially that this business is returning to pre-crisis levels in the foreseeable future? Thanks.
If I start off with the first question, the slight improvement in June. I think, clearly we have to say that the slight improvement in June is related to Europe. If we look at what we said about the quarter two, we said that we had, I think slightly below 30% in the quarter lower sales. I would say if I would compare month by month, June will probably be around 25%, so slightly lower than what we saw in the previous months.
Mm-hmm. Okay.
First question. Anything else?
The other question, I believe, on the tax rate, is that right, Mr. Bauer?
Yes. Tax rate for this year.
Mr. Bauer, also in this year, we do not see that we will capitalize deferred taxes from our German tax group. The tax rate might still be over-exaggerated high. Underlying, we have a tax rate of 27%, but, as I said, still distorted by not capitalizing tax assets in the German tax group. On the other side, we also have experienced a little positive effect in the U.S. where there was a new law allowing us to capitalize and to use old tax losses. Overall, distorted situation underlying 27%.
Mm-hmm. Okay.
I'll try to tackle your last question. This is always a fun one because I do confess to being the oil and gas dinosaur here on the team. I think the 5% CAGR you refer to, this is from our Capital Market Day presentation February 13th, where we took our revenue base 2019 and compared it to our expected revenue base 2024. We showed at that Capital Market Day presentation a total company CAGR of 5%. In line with that total company, oil and gas also growing by 5%. Do I have a crystal ball that gives me insight above and beyond the market? Probably not. I can help you a little bit. When we entered into the crisis, late March, early April, things dropped fairly quickly in Aberdeen and in Stavanger.
We were looking at 50% lower revenue on the year, and we thought it would continue at that rate in 2021. More recently, we've been working on our short-term, mid-term updates, and we think compared to 2019, 2021 will be at about 75%, so 25% drop on the baseline 2019. Then, slow recovery going forward. What do I base that on? Just dialogues with customers. We have won contracts, despite COVID, despite low oil price, we have won new contracts in the North Sea. Life does continue. Will it go back to the boom days? I'm not sure. I think it'll be a little bit demand driven. You saw that demand dropped to about 92 million barrels a day from a high of 100.2, I think.
Of course, some of that dip is caused by COVID-19 and people not moving or traveling or flying. That's probably as much as I can give you right now. What we are doing is we're looking at alternatives so that we don't rely on the oil price recovery to meet our 2024 guidelines or commitments, if you want. We're looking at alternative measures. At this stage in time, we've given you an outlook on 2020, and we are not changing our long-term outlook for 2024.
Okay. All right. Thanks.
There are no further questions at the moment. If you would like to ask a question, please press zero and one. The next question comes from Marc Gabriel, Bankhaus Lampe.
Good afternoon. Congrats to the team for managing the crisis that well. I have three questions, if I may. First of all, how quickly could you shift the levers again if the crisis is over? How quickly can you get the people back on board, which you laid off now? That's my first question. Second question is, when I look at the scrubber market, running back to zero within one year, where you were extremely optimistic 15 months ago, it is naturally becoming increasingly difficult to deliver a sort of constantly in the business model. The former real estate business was, of course, a rock solid anchor. What are the strategic lessons learned from this crisis? In addition to that, what opportunities do you see to take the volatility out of the business model going forward? Thanks.
Okay. Good questions. Let me begin with your first one, which is all around personnel, I think. We are a people company, and if you look at our makeup, more than 50% of our costs go into personnel costs. A large part, not all of it, a large part is our own personnel. Some of it is temporary labor that we take on board to deal with projects, but also with seasonality. If you compare our headcount at the end of Q2 this year with last year, we're roughly 6,000 people less. Last year, we had, at the end of Q2, 37,469. Sorry, at the end of Q2. This year, we're at 31,533, so that's a big drop. Within that 31,533, we currently have 2,733 on furlough. Of course, these we can unwind fairly quickly, overnight, in fact.
As we go through towards higher levels of activity, we do call on temporary workers and we're not waiting for that to happen. We're actually already in dialogue and planning additional workers through to the end of the year. I think one of the lessons learned, that you're asking is to rethink what is our manning model? How do we build more flexibility and agility into that? It's one of the lessons learned. Second lesson learned is around home office. Home office always sounds kind of cozy and easy. In our experience, it works when you have defined projects and people working to a schedule and to a delivery point for those projects. I'm talking about engineering, for example. It's a little bit more difficult when you have services where people have to be on call and work in teams.
Home office is certainly a consideration with some parts of our business. If home office is real and going forward, of course, it doesn't have to be restricted to a, let's say, 10, 20-mile radius around the office. Home office can be done from other countries even. Opportunity there that we haven't yet fully explored, but that the crisis is teaching us to look at. Finally, I think, is the balance that we have between project and services. The effect we're seeing in the U.S. is because we have a large project element there. I think going forward, and this is also part of our Capital Market Day presentation, we wanted to increase the percentage of service business that we have in the U.S. to be more resilient through these kind of, not only COVID cycles, but also industry cycles.
I think volatilities, that kind of speaks to high frequency waves. We do think there is a cyclical nature in our business, seasonal nature, which we try to balance with a better organizational structure. In terms of the industry cycles, by trying to have a larger element of service business versus project business. The scrubbers.
Oh, yeah.
Scrubbers, you're right. We were very euphoric already two years ago on scrubbers, and it's really dissipated overnight. What are the lessons learned from the scrubber business? I think some of the lessons we actually had going into this. We didn't actually want to build up our own resources on scrubbers because we always saw it as a wave. We saw as a rising demand being satisfied, and then the wave declining, maybe a second wave, where other owners of vessel tankers waited to see to what extent the governance of lower sulfur emissions was being policed or otherwise. In order to ride that wave, we didn't actually build up any of our own manufacturing. We outsourced a lot of that to a number of partners. Of course, in then backpedaling and shutting it down, that makes it a lot easier.
Yeah. Maybe one follow-up question. There are also other business opportunities, I would say, like CO2 storage or the steel industry is working on low carbon steel production, and it's investing a lot in combination with the government and others. Isn't that a field where you have engineering expertise to enter that market as well?
Yes, we do. Before we start beating our chests, of course, we'd like to build some traction. We have, I would say, good core expertise in gas treatment. Some of the projects we announced evidence that. If you look at electrolysis, for example, in producing the hydrogen, the oxygen, there is gas drying, there are flanges and systems. Yes, there we have expertise. We are also involved in various customer discussions around projects on green and blue hydrogen production, associated CO2 sequestering. We'd like to get a little bit more, let's say, traction to be able to reference more projects than just to put hopes out there. You know us as very conservative group of people. We like to be boring, deliver exactly what we say. We don't like to raise expectations.
Maybe scrubbers was one exception where we have to learn and not do that. The other area where we are also quite busy is on either recycling, so the circular industry. We have customers who are working on bioethanol, on wood-fired power stations. There are things around the ESG theme that we're quite busy on, and we look forward to announcing some of those successes, but only later in the year.
Okay. Yeah, thank you very much.
The next question comes from Martin Bolland Okay. It seems we lost Mr. Bolland. If you get back, please press zero and one again. There are no further questions at the moment. If you would like to ask a question, please press zero and one. It's Martin Bolland again, Bank of America. Martin, you're on.
Oh, yes. Thank you. Can you hear me well, or is there still an issue?
We hear you well.
Okay. I will try again. Apologies. Just regarding your guidance for 2020, so you're guiding for adjusted EBITDA above breakeven, which implies a big improvement, obviously, for the second half. In terms of revenue, you're guiding for -20% for the full-year, so only limited improvement versus H1. My question would be, are you just being conservative on revenue? What should really drive such a big improvement in profit in the second half? I obviously understand that profit recognition is seasonal in a way, but you don't have the support from the furlough, and you have these underperforming entities in technologies. Is it because you took some one-off costs, perhaps in Q2 that will not be occurring in the second half, and that gives you the confidence, or is it just a conservative approach on revenue?
I'm happy to try to answer that. In the second half, obviously, we needed some time until we could adjust the E&M structures in Europe. I think also as you proceed with topics like adjusting your cost structure, you get better and better month on month. You can also see clearly that out of the results in the first half, a lot of the big dip came out of technologies. As we also mentioned, these two legal entities and technologies hurt us quite badly here in the first half, and we're obviously making everything we can not to repeat that in the second half. Makes a significant improvement for the second half. Of course, the underutilization month by month that will help us.
As you can already see, the E&M Europe, both quarters heavily impacted by COVID-19 and also the oil and gas, but still being profitable. They are, of course, driving then also the improvements in the second half going forward here. Yes, we are still only saying that we expect to be positive at the EBITDA adjusted. I think there is still quite a lot of uncertainty in the different markets. We have some assumptions in the presentations, and we are not expecting, for example, a second wave that will conclude in a lockdown again that we saw in April and May to be repeated in the second half. We are not expecting that there will be any further major delays of the turnarounds that are very important for the profitability. We are also not expecting that the oil and gas will recover too fast here.
Is there some potential to be better than that? Let's hope so, but I think with the uncertainty in the quarter four that we still have, it's wise to stay with the guidance that we gave in May and confirm that at this point in time.
Thank you for that. Thank you.
There are no further questions at the moment. We conclude today's call. Thanks to all of you for participating. We wish you all an enjoyable rest of the summer. Stay healthy, and we'll speak to you again latest in November. Bye.