Let's start. Mr. Kleinfeldt, the stage is yours.
Thanks a lot, and also a very warm welcome from my side to Q3 earnings call of the Friedrich Vorwerk Group. Very short introduction from my side. I guess most of you know us both anyhow. So my name is Torben Kleinfeldt, CEO of Friedrich Vorwerk Group, within the company since 22 years by now, in the energy infrastructure business for almost 30 years. And I will run you through a part of today's presentation. First of all, I will give you an update about the latest development of our markets. After that, hand over to Tim for the actual financial figures of the third quarter and the year to date. And then I will take over for a short outlook of upcoming projects. And of course, after that, we will be ready for your questions. So let me please start with a very short market update.
As you all know, in Germany, Germany is looking as the main country within the European Union to develop the hydrogen economy and therefore, government agencies and also the German government has decided to set up a Hydrogen Core Grid. This has already been approved in late summer by the German government. The core grid for hydrogen transport within Germany will comprise of roughly 9,000 km of large-scale pipelines, of which 44% will be new-built pipelines and 56% of the core grid will be converted pipelines. Pipelines that have been used over decades for the transport of natural gas and will be then made ready to be able to transport large amounts of hydrogen. At the moment, investment volume in this core grid will be shortly under EUR 20 billion .
Development of the grid has already been started in the north of Germany and will probably continue until 2032. Friedrich Vorwerk, as a company group, is already involved in the first projects for Gasunie Germany with the conversion of a pipeline running from the area of Bremen towards the Danish border. Besides that, and please the next slide, we will not focus on cables in the market update this year, but we are looking at what we could call the CO2 Core Grid. Germany is not only looking at getting new forms of energy into the country, but also is trying to get CO2 out of the country. Therefore, it is planning to set up a CO2 transport grid.
The first plan has been just plotted, and it was comprised of about 5,000 km of CO2 pipeline to capture roughly 20 million tons of CO2 per year and bring it to locations where it can be deposited underground, for example, in old oil or gas wells. Also here, investment volume for the CO2 grid, which will cover most of Germany, will be roughly EUR 14 billion. And yeah, this is so to say the second wave of pipeline projects. The development of this grid will be planned in the early to mid-2030s. So this is for us as a company group, a very nice outlook, not only for our cable division, but also for our pipeline construction division.
Also, we all know once pipelines are newly constructed or converted from natural gas to hydrogen, it is also necessary not only to build the pipelines, but also to construct new compressor stations, new pressure letdown stations. And this, of course, will also add to the investment volume and also to our market, which we can cover within our company group. So that's for the market update, and I would like to hand over to Tim for the Q3 figures.
Yeah, thank you a lot, Torben. I would also like to welcome you to our earnings call on the third quarter figures. And I honestly think we can summarize the third quarter with a clear sense of conviction under the headline we delivered. We have delivered in terms of growth. We have delivered in terms of profitability. We have delivered in terms of cash flow, and we have delivered in terms of our recruiting success. So let's have a look at the third quarter in more detail. Following an already strong second quarter, we were able to further accelerate our growth in the third quarter and increased our revenues by 32% to EUR 145 million . A key driver for growth in Q3, but also for the year as a whole, is of course our flagship project A-Nord, where we further increased capacity over the summer.
In addition, the ongoing and remarkable recruiting success played an important role in the continuous growth. By the end of the third quarter, we had already exceeded our annual target of 10% employee growth and therefore increased the number of employees by actually 14%. In the first nine months, we generated total revenue of EUR 339 million, which corresponds to a growth of 23%. As you can see from the chart on the right, our electricity segment is unsurprisingly the main reason for this, achieving the same level of revenue as natural gas for the first time. Electricity still accounts for around 80% of the order backlog, meaning that the segment reporting will continue to develop accordingly in the next quarters. This high-quality order backlog led to a significant improvement in profitability in Q3.
We more than tripled EBITDA from EUR 6.8 million to more than EUR 25 million and thereby achieved an absolute record result. This is even more noticeable in EBIT, where we increased the EBIT margin from 2.1% to 13.7% and were able to return to the pre-2023 transition year profitability levels. And the natural gas and electricity segments in particular contributed to this as we achieved very good project results across the board. Accordingly, EBITDA in the first nine months totaled just under EUR 50 million with a margin of 14.7%. EBIT increased from EUR 7.1 million to EUR 34.4 million, thereby delivering a double-digit EBIT margin again. Apart from the so-called EWA pipeline we just published this morning, no major projects were awarded in Q3, meaning that the majority of the EUR 109 million order intake in Q3 was attributable to small and medium-sized projects.
Nevertheless, a number of large contracts are due to be awarded in the coming months, as Torben will report in detail later on. Without the special effect of our flagship A-Nord project, growth in order intake would have amounted to around 25% in the first nine months. And at around EUR 1.2 billion, the order backlog remains at a very high level and gives us the opportunity to be very selective when acquiring new projects. As I said at the beginning, we have also delivered in terms of cash flow. We have improved our net cash position by more than EUR 40 million in the last three months and already had over EUR 30 million net cash at the end of the third quarter. And as you know, for seasonal reasons, we generally achieve our highest operating cash flow in the fourth quarter, which is still to come.
This fantastic development is mainly due to the following reasons. Firstly, of course, the significantly higher level of profitability placed into our hands. Secondly, we've been able to improve payment terms in many project contracts. And finally, we've improved our internal processes and systems to ensure even more timely invoicing, especially on the large-scale projects. And based on this very strong performance in the current year, especially in Q3 and an upbeat outlook, we raised our guidance already for the second time a few weeks ago. We now expect revenues in the range of EUR 430 million-EUR 460 million and an EBITDA margin of 14%-15%, which corresponds to a margin improvement of around 6 percentage points year on year. Yeah, and with that, I'd like to hand back to Torben for the business update.
Tim, thanks a lot. And yeah, I would actually start with our newest project. It's a pipeline project, the so-called Etzel- Wardenburg pipeline. Customer here is Open Grid Europe. And the project is again taking place in the very northwest of Germany. It is a 48-inch pipeline connecting the caverns, the cavern system of Etzel to the compressor station of Wardenburg. We, as Friedrich Vorwerk, won the second lot with a length of 24 km in a joint venture, again with our subsidiary Bohlen & Doyen and the HABAU Group. Order volume here is very high, double-digit million euro range. We have already started executing this project very shortly after the project has been awarded. So we are setting up our site offices, and first people are already doing preparations for construction roads.
So we are ready, hopefully, to tackle the main part of the project once the weather clears in 2025. And this will give us a very good outlook for our welding and also for our civil works within pipeline construction for 2025. Because please remember, and we have plotted it here on the right lower corner of the slide, we have already been awarded the SEL2 project, which is supposed to be executed also in next year. So we will have to split our pipeline capacities between SEL2 and also the EWA project. And the EWA project will actually be the first project where we are planning to use our newly developed welding system and hopefully have a good quality of welds and also a good progress in the front-end welding for the 48-inch pipes.
Yes, the EWA pipeline is not only a natural gas pipeline because for the first years of operation, natural gas will be the main focus of transport, but this pipeline will also be constructed in an H2-ready way, so it can be used later on for hydrogen transport without any technical changes to the pipeline system. Yes, and besides that EWA pipeline, maybe to give you an outlook what our estimation department is working on at the moment, because there are a lot of very large-scale projects being tendered at the moment, and for a lot of these projects, we are into a very active tendering stage.
That is true not only for natural gas, but also for electricity, where we are currently working not only on offshore connection projects like the LanWin2 project for the cable constructor Nexans, but also we are working on a lot of lots that have still not been tendered out for the SüdLink projects. So currently, we are working on lot 3, 5, 6, 7, and 8, which all are executed very close to our main office in Tostedt or in the region of Hanover. Also, SüdOstLink is putting some more lots on the market. We are especially interested in the four lots, which will be constructed very close to our branch office in Halle, Leipzig area. So we are active in these tenders also.
We do think that most of the SüdLink and SüdOstLink projects will be decided maybe not in December, but for sure in the first quarter of 2025. We might see some further order intakes in the field of electricity as well. Looking at the pipeline work at the moment, besides the EWA project, which we have just currently won, we are tendering for the WAD projects, which is basically the extension of the EWA project. Customer here is also Open Grid Europe. The pipeline will be a 40-inch pipeline and a 40-inch pipeline, and the length will be in total 90 km divided in three lots. I think our chances of winning maybe one lot is here also quite feasible.
Also for our current customer, Terranets BW, where we are active on the SEL projects, there are further projects coming up, which will be tendered out very shortly. The extension of SEL, SEL3, SEL4 will be up for tender in the next month, and also the so-called SPO, so the Spessart-Odenwald-Leitung, which is very close to Frankfurt am Main. Besides these OGE projects, we are also tendering currently for Gasunie Deutschland with ETL 182 and ETL 179, all running from the new LNG terminal in Stade towards the south. Those two projects are also very interesting for our company since they are more or less in our backyard of our headquarters in Tostedt.
So this is a very nice market outlook, I think, for the cable and pipeline construction, but also in terms of plant construction, we are looking at very large projects and actually also projects in hydrogen, because since the German government has decided to set up the core grid for hydrogen, of course, we need hydrogen, so we need electrolyzers to fill these pipeline systems. And besides our own small lighthouse project at Bohlen & Doyen, we have just delivered a one-megawatt electrolyzer to Stadtreinigung Hamburg. And we are working currently in the engineering phase for a 20-megawatt pipeline electrolyzer system in the Netherlands. But as you can see on this slide, without mentioning any names, that also here in total, Vorwerk is at the moment involved in electrolyzer projects with a total capacity of almost 300 megawatts. Yes, Tim elaborated. We really have delivered this year.
So I think we had a very good run, not only in terms of our financial performance, but also in terms of hiring new people. You can see on this slide that we were able to step up our employees to almost 2,000 employees in total. So all the measures we have taken in recruiting capacities and also in benefits for our work staff, I think, have paid out. And we are back to target and have a 10% organic growth within our company group. So that's, I think, a very good outlook also for the growth in the future. And we hope we can keep this up over the next years. Yeah, that's it from our side. Thank you very much for listening. And I think we both are ready to answer all your questions.
Yeah, thank you so much for the insightful presentation. We are now moving forward with the Q&A session. And to keep the conversation engaging, we'd kindly like to ask you to pose your question via the audio line. To do so, just raise your hand button. And you can also do this when you're dialed in via phone with the key combination star 9 followed by star 6, or you can also use our chat. And we have a first question from Lasse Stüben. You should be able to speak now.
Hi, good morning or good afternoon. Just two questions, please. The one is on the margin profile. I mean, clearly very good margin in the third quarter. Is there anything in terms of positive one-offs or anything else we need to consider in that margin? And I guess my question is, how sustainable do you see that margin profile from the third quarter? And then the second question would just be on the hiring. Looks like you added almost 120 people in the third quarter. So just some additional detail around how you've done that and what your kind of outlook is for, is that the kind of pace you're expecting for the coming quarters, or will you slow down a little bit just to integrate those people? Thanks.
Tim, do you want to take the first one and I take the second question?
Yeah. Hi, Lasse. Thanks for the questions. Regarding the Q3 margin levels, I can confirm that there are no major one-offs, so this is the operating margin profile from the projects we have in the order book, and we also think that this is very sustainable. I mean, we have achieved even higher margin levels for many years, except the 2023 transitional year, and therefore, we feel pretty confident that this development will be sustainable also the next years.
Yeah, and maybe if I may add also, I think we have almost no projects with negative project margins at the moment. So I think I've really never seen such a solid project lineup as we have at the moment. So yeah, that's very, very nice at the moment. In terms of hiring, of course, we have taken numerous measures, especially stepping up our HR department. We have rolled out a lot of benefits to our employees. And of course, it's, I think, not only our own measures that led to the fruitful numbers, but also we got a bit of tailwind from the basic construction industry, which is, of course, a bit down at the moment in Germany. So we felt we were able to recruit a lot of engineers from building construction and other fields of general construction.
And also, of course, that paid out with the blue-collar workers, which are also pouring over from general construction. So both of the measures, I guess, helped us a lot to, in the end, see these numbers within our company group.
Thank you so much for answering. Also, thank you so much for the questions. Is there a follow-up question, Mr. Stüben? Or was this?
All good for now. Thank you.
Thank you so much. We received another question from the chat. If you could please elaborate on this. What will happen to all the projects the Ampel decided after elections and new government, which might be led now by the CDU?
Yeah, we actually thought about that. But what we are looking at at the moment is the first wave of electricity lines. So SüdLink, SüdOstLink, A-Nord, these projects are cemented. So it doesn't matter if we see a change in government. We know that all the cables for these projects are already purchased. Most of them are already in stock with our customers. All public permits are in place. Most of the private permits are actually in place. So these three projects, together with all the offshore connection projects, will never be touched by a new government. I'm very sure about that. We will have the second wave of large cable projects in front of us starting in the years, I would say, 2031, 2032 onwards. So these projects are not as mature as the first wave projects. We have no definite permits for these projects.
Also, procurement has not started. So these projects could easily be turned around, for example, not using underground cables, but above-ground power lines. So for these projects, everything is still possible, but that would have an effect from 2035 onwards. I don't think, in my feeling, that the new government in Germany, even if it's a pure, even if it would be a pure CDU-led government, they will probably not go back from switching from cables to above-ground lines. I mean, we have seen what happened in Bavaria. They also made a clear decision there. So I guess in terms of energy grids, the new government will probably stick with the plans as they are right now. Same is true for the hydrogen grid that has been already decided.
I do not think that these plans will be turned around because all permitting has already been started for the core grid. For the conversion projects, works have already been started. I guess this will also be a project for a new government in Germany. We'll see what happens to the CO2 pipeline grid. Of course, a new government could either push it or abandon it. I'm not sure. We hear the discussion here and there in Germany that we might go back to nuclear, but in the end, even if we would fall back to some nuclear power stations, I think it would not change the overall setting of the grid, which would directly influence our company.
Thank you so much for answering. We received another question from the chat. Could you provide any guidance around when you expect to see cash flow from operations covering CapEx spending?
If you're looking into the full year figures, we will, of course, have a free cash flow. I would expect free cash flow of around at least EUR 30 million for the full year 2024. This is due to the seasonal effects. We have the buildup of the working capital during the summer. In November, December, all of our projects are settled and invoiced, which is leading to a very high cash in the next weeks.
Thank you so much. And then we have another question from the chat. Could you elaborate, please, a bit more on the backlog? How aggressively are you trying to acquire new orders or permits, especially in view of the backlog is already pretty high? Would a higher backlog even be desirable? Can more orders even be met considering your capacities?
Of course, we are still interested in getting new projects on board. We know that we sometimes have slipped in existing projects which are already in the backlog. So it's always good to have some fallback alternatives in other projects where we can allocate our resources. Also, I think at the moment, on some of the large projects, we see quite interesting margins. So we would really do some cherry picking and follow these projects where we do get a feeling that we are able to accept good margins and add this to our order backlog. We are also very confident that we can be on track for the next year or so, 2025 and 2026, in terms of acquiring new people. So I think we can come back to our organic growth of more than 10% a year. And also, we still have some M&A targets in the pocket.
So if we were able to acquire new companies with a lot of engineers and a lot of blue-collar workshops, it would, of course, be nice to integrate these new resources in projects where we know we have very favorable margins.
Thank you so much. Then we received another question from the chat. Could you give us more details on how things stand today with the bonus model system of the A-Nord projects? Are any bonus payments reflected on the current figures, or will the bonus payments only be integrated into the figures at the end? When can you finally say how the project has gone?
So far, the project is going well on track. There are no bonus figures reflected in the current figures, as the bonus will only be determined at the very end of the project, so probably end of 2026. Before that, there will be no bonus within our P&L statement.
Thank you so much, Tim. Then we received another question. Could you elaborate on the M&A opportunities you see?
I think not much changed. M&A is going in two directions. First, smaller specialized companies. We're still looking for cathodic protection, E&I, smaller companies which maybe have some specialties we have not on board at the moment and cannot offer to the market, which is especially in E&I quite complicated at the moment because this is an industry which is still very much occupied. Larger units where we can source a lot of blue-collar and engineering resources for our large cable and pipeline projects. We have a short list of, I would say, five companies we are looking at the moment in different stages. Yeah, you never know how M&A goes. Either you win or you lose. There's no in between. It is, of course, always hard to say if something will work out for sure, not this year.
My guess is not in the first two quarters of 2025.
Thank you so much for the answer. We haven't received any further questions, so we're going to wait a moment. This is the time for you to ask. Please use the chat or the raise your hand button, or if you're dialed in via phone, again, key combination star nine followed by star six. We received another question from the chat. Would you lever up the balance sheet in case you proceed with one of these opportunities?
Given the very strong balance sheet we have, there are all options on the table dealing with larger M&A acquisitions. I don't want to decide for one option today. This will depend on the specific transaction.
Thank you. Could you give us a little bit more color on where do you see Friedrich Vorwerk in midterm 2030 in terms of sales and margins?
Tim, you want to take this?
We had the vision during IPO that we will have like EUR 1 billion in sales in 10 years, which would be the beginning of the 2030s. I think this target is still in reach with the very positive development we've seen in recent quarters. We also said, of course, we want to sustain with the double-digit EBIT margin. This will be also the target for the mid to long term.
Thank you so much. We haven't received any further questions, so I would like to draw today's panel's call to a close. If you have any questions in the future, please do not hesitate to contact us or the leadership team. And thank you so much for your attention. I hand over for some final remarks now to Mr. Kleinfeldt. Thank you.
Yeah, thank you all for listening. I think we had a very good year behind us. I also hope that we have a fantastic fourth quarter this year. Hopefully, the weather is on our side, as you know, mainly our grids project. So cable laying and also pipeline laying strongly depends on the weather. I mean, we are able to work in all weather circumstances, but of course, production will be higher if we have less rain. And so let's hope for good weather. But I'm very sure that we can definitely reach the targets we have set for our company this year. And we are looking at a great project pipeline, not only what we have in the order books right now, but also what we see on all of our markets today.
For the staff we have on board, I think we are capable of tackling many large-scale projects at one time. I'm very fascinated for 2025. I think also 2025 will be a very good year for our company. Yeah, so good to have you all on board on the investor side and hope you stay with us and speak to you for the next earnings call then.