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Customers

 

For Bilfinger as a service provider, customers are the focus of its business activities. The relationship with our customers and their satisfaction with the work that we do is of utmost importance  for our business development. Bilfinger is integrated into their value-added processes as a strategic partner. The quality of our customer relationships is decisive when it comes to continuing or  intensifying cooperation and thus influences our order situation and our economic success.  

We have a broad customer base with customers that have been placing their trust in us for many years. Customer proximity encompasses our industry expertise combined with trusting, co- operative interaction with our clients. We pay particular attention to the quality of our services and to delivering a range of products and services that is consistently aligned with the needs of  our customers. Through our services we want to support the sustainable value creation of our customers and thus contribute to both their longterm competitiveness as well as our own. 

Sustainable industrial services

Sustainable industrial services

Increasing awareness of climate change and the need for accelerated initiation of worldwide initiatives for the energy transition are opening up new attractive market opportunities for Bilfinger  as a leading industrial services provider. This is all the more true given that a major share of our customers are active in energy-intensive industries. They face the immediate task of securing their future energy supply and significantly reducing their carbon footprint in the process. On this basis, it is a key component of Bilfinger’s growth strategy, which envisages a higher share of sales from energy transition projects and carbon reduction.

Markets and industries

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Bilfinger’s largest customer groups are the industrial sectors of chemicals and petrochemicals, energy and utilities as well as oil and gas. As a result of socially and politically mandated energy transition and climate protection measures in all key stages of the value chain, these industries are all facing fundamental innovative leaps. Bilfinger has set the goal of accompanying and actively shaping these essential changes.  

The chemical and petrochemical industry is undergoing a transformation of its production in many areas. Traditional source materials such as oil, naphtha, gas and coal are increasingly being supplemented by recycled materials such as plastics, other consumer waste and biomass. Basic  chemicals are produced in traditional steam crackers and, in the future, in e-crackers and through chemical recycling. The energy required for production is increasingly coming from renewable sources. Innovative hydrogen and carbon capture technologies are needed to use these efficiently. It is not only production that will shift to a lower-carbon environment, but also the transport and distribution of products. Pipelines, low-carbon transport and sustainable fuels will play an important role in the transition to a low carbon economy for Bilfinger and our clients in the future.  

Energy companies and utilities have a central role to play in the energy transition. The share of renewable energy in Europe’s energy mix will likely increase from 27 percent in 2019 to 38 percent in 2030. This will require the creation of 2,400 gigawatts of new renewable capacity – an increase of more than 90 percent compared to 2019. The largest share will be provided by solar energy with 1,400 gigawatts followed by wind energy with 700 gigawatts. In a number of countries, there is also an ongoing or renewed trend toward nuclear energy as a low-carbon form of energy generation. 

Oil and gas will play an important role in the energy mix in both the short and medium term despite the energy transition. Even in the most sustainable scenario in the International Energy  Agency’s World Energy Outlook, almost half of the world’s total energy demand will continue to be met by oil and gas in 2040. The focus of oil and gas companies, however, is shifting fundamentally. There will be a major shift from oil to gas, while production, processing and distribution will have to meet much stricter environmental requirements.

Portfolio of sustainable industrial services along the customer value chain 

With a view to the energy transition, Bilfinger provides sustainable industrial services along the value chain of its customers: On the one hand, the company focuses on areas of activity in which  it is already established, including nuclear power, hydropower and district heating networks. There are also areas of growing strategic importance, such as the production, transport and storage of hydrogen, carbon capture and storage and battery production. With its portfolio of services, the Group is addressing the imminent decarbonization of energy-intensive production, transport and  processing operations and increasing energy efficiency at all stages of the customer value chain. Low-carbon energy production and the reduction of energy consumption and emissions are the central tasks here.

 

Hydrogen

Bilfinger’s objective is to contribute to the increased use of hydrogen as part of a climate-friendly energy value chain. Here, the Group can apply the expertise it has established over many years in the field of gas treatment for the use and transportation of hydrogen across the entire value chain.  

In hydrogen production projects, Bilfinger acts as an independent system integrator. Its engineering, prefabrication and installation expertise has been put to the test in a wide range of projects, including the construction of new electrolysis plants in Germany and Austria and as a partner in the Energy North Sea Program for the design of hydrogen plants on planned North Sea energy  islands. The goal is to produce and store green hydrogen, i.e. hydrogen produced on the basis of renewable energies.  

In the transport and storage of hydrogen, Bilfinger mainly supports the expansion or conversion of existing gas infrastructure. Bilfinger’s experience and capabilities in the field of gas treatment – for example in gas drying – position it as a competent partner for technology companies. Bilfinger works with the pioneering company Hydrogenious LOHC, for example. As part of a cooperation agreement, solutions will be developed to enable the storage and transport of hydrogen in liquid form using liquid organic hydrogen carriers (LOHC). This process reduces energy consumption compared to conventional solutions, as hydrogen no longer needs to be cooled for transport. 

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Carbon capture and storage

Carbon capture and storage (CCS) is a technology that will play a key role in achieving the goal of climate-neutral industrial production in the years ahead. By capturing CO2 emissions as they are generated and then processing or storing them, the volume of environmentally harmful greenhouse gas emissions can be significantly reduced. 

With its expertise, Bilfinger delivers development and support for all aspects of CCS-related technology. This includes the separation of CO2 emissions, their purification, compression and liquefaction as well as their storage and transport. Bilfinger prepares feasibility and environmental impact studies as well as safety concepts while also managing approval processes. The company supports the construction of plants through project management and the procurement, manufacture and assembly of the required components.  

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Nuclear power

In a growing number of countries – currently mainly the United Kingdom, France and Finland in  Europe – nuclear power is considered part of the national climate protection strategy. These countries are counting on modern nuclear power plants to achieve their targets for reducing CO2 emissions with a high degree of energy availability. Bilfinger is successfully positioned in the markets there.  

The focus is currently on the United Kingdom, where Bilfinger is involved in the construction of the new Hinkley Point C nuclear power plant. As a ‘Tier 1’ supplier to operator Electricité de  France (EDF), the Group is well equipped to also participate in the construction of the country’s nuclear power plants that are planned for the future.  

France is the world’s largest exporter of electricity, with 70 percent of its electricity generated from nuclear plants. Bilfinger is involved in several nuclear power plant projects through the export of its know-how. These include the construction of the new power plant unit 3 in Flamanville, participation in the “Grand Carénage” program for the modernization of operator EDF’s current nuclear power plants and six new pressurized water reactors which are still in the early planning stage. 

Finland also sees nuclear power as a bridging technology and plans to further expand existing capacity. In Germany, on the other hand, the focus is on the dismantling of nuclear power plants  and the safe handling of residues. In connection with the planned clearing of the Asse mine in Lower Saxony, Bilfinger, together with other participants, is developing innovative specialist tools that can be operated remotely. These will be used to retrieve drums containing radioactive waste from the mine, thus facilitating safe final disposal. 

Bilfinger is well positioned in the growing nuclear market as a partner for the entire lifecycle of nuclear power plants. 

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Hydroelectric power

Of regional importance, particularly in the Alpine countries, are Bilfinger’s activities in the generation and storage of energy generated by hydroelectric power. In addition to projects in hydraulic steel engineering for river power plants, Bilfinger also focuses on the assembly of turbines and valves as well as the design and construction of pressure piping systems for pumped-storage power plants. Here the company can offer its customers a complete package from a single source including engineering and manufacturing, assembly and commissioning. 

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Battery production

The majority of batteries required in Europe for electric vehicles are currently produced in Asia. This will change in the near future, however, because major investments to expand capacities are currently being made in Germany, Poland, Hungary and Scandinavia. Initiatives are also expected in other European countries. This dynamic growth market is being driven by the trend toward a sustainable reduction of CO2 emissions. The business opportunities for Bilfinger can be found in the engineering and construction of plants for the processing of essential raw materials as well as facilities for the sophisticated chemical production of battery components. Bilfinger is already successfully represented in this market; in Northern Europe, the Group is involved in the construction of a production plant for a major European chemicals group. A basic product for batteries for electric vehicles will be produced there in the future. In addition, Bilfinger is involved in the construction of new battery production plants in Scandinavia and Poland on behalf of another well-known battery manufacturer.

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District heating networks

Optimizing municipal supply networks is a key component when it comes to more efficient energy use. District heating networks in particular offer the possibility of taking waste heat – from industrial processes, for example – and transferring it to different locations for use. The company has many years of experience in this area, particularly in German-speaking regions. The ScaleGrid approach, which Bilfinger helped develop, combines a site-specific potential analysis of diverse heat sources with the development of options for demand-oriented use as a source of energy.  

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Energy efficiency

Despite major investments in new projects, CO2 emissions in the decade ahead will be largely dominated by existing industrial plants. These must be optimized and modernized to reduce energy consumption and emissions with the same level of utilization. 

Measures that can be executed within the framework of the existing infrastructure include, for example, improved thermal insulation. A certified analysis procedure Thermal Insulation Performance (TIP) Check illustrates energy and heat loss resulting from poorly insulated components – and thus helps with the identification and implementation of appropriate measures such as the application of insulation to these components.  

A more complex energy efficiency method used by Bilfinger is the so-called pinch analysis. It evaluates the cold and heat flows of a process and, in addition to an evaluation of the current  situation, also provides a theoretically ideal system status. Based on this ideal situation, Bilfinger then develops an individual energy efficiency concept and proposes modifications to the plant that optimize combined heat and power.  

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Bilfinger have the experience, manpower and technical capability to deliver your hydrogen project: our global teams can support you from feasibility studies right through to operations and maintenance."

Stephen HillGlobal Development Director - Energy & Utilities & Key Account Management at Bilfinger UK

Bilfinger ensures a high level of flexibility and reliability in all hydropower-related services. The level of dedication is demonstrated, among other things, by the significant number of long-standing customer relationships we have."

Stephan EbnerHead of the Hydropower Business Unit at Bilfinger Industrial Services GmbH

Bilfinger convinced us with a high-quality project concept and an excellent cost/benefit ratio."

Andreas GutschekMember of the Executive Board at Stadtwerke Duisburg

Increasing requirements of the future, such as climate protection and mobility, present a number of challenges. At the same time, they offer enormous opportunities to develop innovative technologies. We help our customers solve the challenges and take advantage of the opportunities with a comprehensive portfolio of services."

Dr. Friedrich SchneiderCEO at Bilfinger Industrial Services GmbH
Growth market of sustainable industrial services

Sustainable industrial services as a growth market 

Bilfinger believes that, with the service portfolio described, it is very well positioned in the growth market for sustainable industrial services.  

Bilfinger’s objective is to increase sales with sustainable industrial services to around €1 billion by  2024. In 2021, revenue generated with the services described above amounted to around €500 million.

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The basis for measuring the Group’s sustainable economic activity is a detailed recording of customer contracts by plant type and trade. This classifies the activities that relate to the contents outlined above and measures them from 2022 onward. The value as of 2021 is the result of a manual survey and is intended to serve as a benchmark for the baseline.  

Growth is being driven by increasing demand from customers, something that the company is addressing with a targeted sales approach and dedicated competences.  

Bilfinger is helping its customers with their energy transition, for example with the maintenance and modernization of their current plants with the aim of a more energy-efficient and lower- emission utilization at the same level of capacity utilization. Around €250 million is attributable to this area for the year 2021.  

On the other hand, Bilfinger sees growth opportunities arising from the technological shift from fossil fuels to alternative sources of energy. The greatest sales volumes are in the area of  nuclear energy with around €100 million, battery production with around €45 million and hydroelectric power with around €25 million.  

The portfolio is therefore bringing together services that make a contribution to the energy transition at different types of plants. The Bilfinger definition is tailored to an industrial services  provider in the process industry and deviates in part from the specifications of the environmentally sustainable activities as defined in the Regulation (EU) 2020/852 Taxonomy Regulation (“EU Taxonomy”) explained below. For example, in accordance with this regulation, energy efficiency and insulation work can be included in the EU Taxonomy if they are carried out on buildings, but not if they are carried out on industrial facilities.  

 

Consolidated disclosures pursuant to
Article 8 of the EU Taxonomy Regulation 

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Article 8 EU Taxonomy Regulation 

The EU Taxonomy Regulation is a key component of the European Commission’s action plan to redirect capital flows in more sustainable economic activities. It represents an important step forward in achieving climate neutrality for Europe by 2050. The EU Taxonomy serves as a classification system for environmentally sustainable economic activities. 

In the following, we as a non-financial parent company present the share of our Group revenue, capital expenditures (capex) and operating expenditures (opex) for the reporting period 2021  that relate to taxonomy-eligible economic activities in connection with the first two environmental objectives (climate protection and adaptation to climate change) in accordance with Article 8 of the Taxonomy Regulation and Article 10 (2) of the delegated act on Article 8.  

A taxonomy-eligible economic activity is an economic activity described in the delegated acts that supplement the EU Taxonomy Regulation (i.e., the current delegated act on climate), regard- less of whether that economic activity meets some or all of the technical assessment criteria set forth in those delegated acts. A taxonomy-non-eligible economic activity is any economic activity that is not described in the delegated acts that supplement the EU Taxonomy Regulation.  

 

Our economic activities:

For the most part, the economic activities of the Bilfinger Group as an industrial services provider in the process industry are not covered by the delegated act on the EU Taxonomy Regulation. They can only be allocated to the economic activities mentioned in the delegated act to a limited extent and designated as taxonomy-eligible. These taxonomy-eligible economic activities relate to the following activities listed in Appendix I of the delegated act on the climate targets of the EU Taxonomy Regulation:  

 

4.5. Generation of electricity from hydropower: construction or operation of electricity generation plants that produce electricity from hydropower 

In the reporting year, Bilfinger generated taxonomy-eligible revenue of €24 million with the construction of power generation plants that generate electricity from hydroelectric power. This  mainly involves the construction of special pipelines in hydroelectric power plants in the E&M Europe segment, particularly in Austria. 

 

7.1 Construction and real estate: New construction 

With €15 million in taxonomy-eligible revenue, new construction of real estate is the second most represented economic activity in the EU Taxonomy Regulation. This mainly includes construction projects in the E&M International segment in North America. 

 

5.1 Construction, expansion and operation of water extraction, treatment and supply systems  

In the reporting year, Bilfinger generated €7 million in taxonomy-eligible revenue from the construction, expansion and operation of water extraction, treatment and supply systems. This includes the construction of pipelines in the E&M Europe segment. 

 

3.1 Manufacture of technologies for renewable energy 

In the reporting year, Bilfinger generated €5 million in taxonomy-eligible revenue from the manufacture of technologies for renewable energy. This includes revenue from companies in the Technologies segment.

 

7.3 Installation, maintenance and repair of energy-efficient equipment 

In the reporting year, economic activity 7.3, with €4 million in taxonomy-eligible revenue represented at Bilfinger. At Bilfinger, this includes insulation work on buildings as well as work on the  installation, replacement, maintenance and repair of heating, ventilation and air-conditioning systems (HVAC). 

 

Accounting and calculation of the key figures

The key figures presented in accordance with the delegated act on Article 8 of the EU Taxonomy Regulation are based on the consolidated financial statements of Bilfinger SE in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU and the supplementary provisions of commercial law applicable in accordance with Section 315e (1) of the German Commercial Code (HGB). 

The determination of the key figures in accordance with the EU Taxonomy Regulation was carried out for reporting year 2021 through the assignment of the customer’s plant types as well as  the activities carried out by Bilfinger to the customer contracts. As a consequence, orders were classified according to their economic activity and compared with those in the delegated act on  the climate targets of the EU Taxonomy Regulation. When allocating economic activities to the activities specified in the delegated act on climate targets, particular attention was paid to the activity description in the delegated act itself. As an additional aid to interpretation, the relevant technical assessment criteria were also taken into account. If these are not applicable to the economic activities of the Bilfinger Group, they were not identified as taxonomy-eligible. This relates, for example, to the classification of insulation work on pipelines and industrial plants, which was  not recorded as taxonomy-eligible because the technical evaluation criteria of Activity 7.3. installation, maintenance and repair of energy-efficient equipment only cover the insulation of buildings in a very narrow sense.  

 

Revenue 

Total revenue of €3,737.4 million corresponds to Group revenue in the consolidated income statement. Total revenue from taxonomy-eligible economic activities in the reporting year was €67 million. This corresponds to a share of 2 percent of total revenue. Revenue from taxonomy-eligible activities is the external revenue generated in the reporting year that relates to customer contracts classified as taxonomy-eligible. 

 

Capital expenditures (capex) 

In the Bilfinger Group, as a result of the asset-light business model, capex plans are negligible. There are capital expenditures relating to assets or processes associated with taxonomy-eligible economic activities and capital expenditures relating to the acquisition of production from taxonomy-eligible economic activities. The volume of capital expenditures relating to assets or processes associated with taxonomy-eligible economic activities was determined for the reporting year using the following estimate: The total amount of capital expenditure (capex) comprises investments in property, plant and equipment (see Chapter C.6.16 Additions to property, plant and equipment) and intangible assets (see Chapter C.6.15 Additions to intangible assets), as well as capitalization of rights of use from leases (see Chapter C.6.17 Additions to rights of use), and amounts to €109.2 million in the reporting year. After subtracting investments in land and buildings, total capital expenditure amounted to €87.5 million. Land and buildings were excluded from the calculation of capital expenditure relating to assets or processes associated with taxonomy-eligible economic activities, because these are primarily administrative buildings that are not directly used to generate sales. If this amount is related to the share of taxonomy-eligible sales in Group sales of 2 percent, this results in capex of €1.6 million that can be approximately allocated to this. This corresponds to 1 percent of the total capital expenditure of €109.2 million. On the basis of the broad interpretation of the determination of capex as published in the second part of the FAQs on Article  8 of the EU Taxonomy Regulation by the Platform on Sustainable Finance on February 2, 2022, additions to property, plant and equipment and to rights of use from leases relating to land and buildings in the amount of €22 million should also be included in the capex from taxonomy-eligible economic activity. This relates to the acquisition of production from taxonomy-eligible economic activities. Due to the publication of the above-mentioned FAQs at short notice, this broad interpretation was only applied to land and buildings in the reporting year. Thus, the total amount of capital expenditures related to taxonomy-eligible economic activity is €23 million and the share of total capex is 21 percent. 

 

Operating expenditures (opex) 

Bilfinger’s business model as a service provider without significant production activities asset-light. The share of property, plant and equipment and of the rights of use from leases in total assets is thus at 13.8 percent. Operating expenses (opex) as defined in the delegated act on Article 8 of the EU Taxonomy Regulation as well as the other operating expenses included in the definition are therefore not significant for Bilfinger. As a result, the Group is exempt from determining the share of taxonomy-eligible operating expenses and reports this as 0 percent. The total amount of operating expenses in the reporting year is €105.2 million.

 

Customer focus

Customer focus

The governance function for supporting cross-regional customers, so-called key accounts, is the responsibility of Corporate Global Development. For the coordinated management of our customer relationships and our business opportunities, we use the customer relationship management (CRM) software Salesforce. We also use this software to conduct system-based customer satisfaction surveys. As part of the questionnaire-based measurement, satisfaction is surveyed within various categories and documented in the system during an ongoing maintenance contract or project. The key account managers responsible for the contract integrate the survey feature into their regular customer dialog at least once a year.  

The use of the Salesforce system to measure customer satisfaction will be gradually rolled out to other customers, thereby establishing a basis for comprehensive evaluations.  

In line with our decentralized business model, the satisfaction survey for customers with whom we work at regional level is the responsibility of the respective regional operating unit. Here we  pursue our approach of consistently putting responsibility for local business in the hands of our local units. Customer satisfaction is also a component of our quality management system. 

 

Quality management

Quality management

For us, the satisfaction of our customers is directly related to the quality of our services. This connection is also part of the DIN EN ISO 9001 standard. This standard is applied centrally as a benchmark for our quality management system (QMS). The expectation in the Group is that operating units will meet the criteria defined in DIN EN ISO 9001, even if they do not pursue external certification. 

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In order to be able to provide the quality required by our customers, we have established an extensive quality and process management system. It starts with the operating units, which are responsible for the quality of their products and services and for their monitoring. They are supported by the quality management of the regions and / or divisions as well as by Corporate HSEQ. 

For the project business, we have established a Group-wide process that is oriented toward different risk classes. The so-called stage-gate process is used to standardize and ensure the quality of business processes in the operating companies when it comes to offers and orders. This process begins in the business development phase and ends with the expiration of the warranty period. The stage gates are predefined points (decisions and reviews) in the lifecycle of an offer or order, the successful completion of which is determined by a stage-gate certificate. 

In addition, Bilfinger has had a cross-regional matrix certificate since 2015 which helps ensure uniform quality standards in the Group and which, by the end of 2021, included 149 locations in 43  Bilfinger companies. The process of further extending the matrix certificate to all relevant Bilfinger companies in Europe and the Middle East has now been completed. Our HSEQ processes and operating units are audited and certified by external companies.

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