March 1, 2022

Técnicas Reunidas will return to profitability in 2022 following the progress in the recovery of its operations

  • A more moderate impact of COVID on operations, the acceleration of projects that had been reprogrammed, the launch of contracts awarded since 2021 and worth EUR 4.8 billion, costs optimisation and SEPI’s financial support are the drivers of the recovery.
  • Despite the unfavourable impact of the pandemic on the company’s key figures, operating profit adjusted for extraordinary impacts amounted to EUR 48 million.
  • The EUR 4.8 billion in new contracts awarded since the start of 2021 brings the backlog to more than EUR 11 billion.
  • The recent financing package of SEPI confirms the strategic nature of the company for the Spanish economy and represents an important reinforcement of Técnicas Reunidas balance sheet.

Despite the strong impact of COVID-19 on the company’s main figures, Técnicas Reunidas has signalled on the publication of its 2021 results that it will return to profitability in 2022 following the progress towards the normal pace of execution of its projects.

More specifically, sales, margins and the pipeline of new projects will continue to recover in 2022 till reaching the usual levels of the company.

In 2021, and despite the unfavourable impact of COVID which resulted in a 40% decrease in sales compared to pre-pandemic levels, operating income, adjusted for extraordinary impacts, amounted to EUR 48 million.

Juan Lladó, Executive Chairman of Técnicas Reunidas, pointed out that “The last two years have been very challenging for our sector and for Técnicas Reunidas. Awards stopped for several quarters; some projects were paused; and projects at later stages were much harder and costlier to execute. As consequence, sales and earnings dipped, and our cash and balance sheet weakened”.

However, he added, “this state of affairs is rapidly improving. On the commercial side, in bidding and awards, we have already experienced a normalized situation throughout 2021. We expect it to further improve this year as clients step up their investment plans on the back of growing world energy needs. Recent awards are a good example of the forthcoming future.”

Therefore, the company maintains the guidance announced to the market for 2022, i.e. around EUR 4,000 million in sales, a margin of around 2% and a portfolio of new awards close to EUR 4,000 million, of which more than EUR 600 million have already been awarded in the first two months of the financial year.

Regarding the possible impact of the war in Ukraine, the company has clarified that expected sales from the projects in execution in Russia account for only 2% of the total estimated figure for 2022.

“Consequently”, Juan Lladó pointed out, “although we follow the development of these events with logical concern and regret, the direct effects of the conflict on Técnicas Reunidas would be frankly moderate”.

Backlog above 11 billion euros

To address the problems addressed by COVID and the return to profitability, Técnicas Reunidas has essentially worked on three fronts: rebuilding backlog with new project awards, reinforcing its internal organisation and strengthening its balance sheet through the financing package received from SEPI.

The EUR 4.8 billion of new awards since the beginning of 2021 currently brings the backlog to more than EUR 11 billion. A backlog that is highly diversified by product (petrochemicals, clean fuels, energy transition, etc.), geography and customer.

In turn, a more moderate impact of the pandemic on operations, the acceleration of reprogrammed projects, costs optimisation and an increased investment in the energy and petrochemical industry will also back the recovery of the profitability.

Market signals confirm that there will be significant growth in investments in the energy sector, both for traditional and new energies, and in the petrochemical sector.

Indeed, energy demand has recovered to pre-pandemic levels. However, investments in recent years have fallen far short of needs. Restoring security of supply levels will therefore require large investments.

Juan Lladó pointed out that “Técnicas Reunidas is recognised by the industry as a key player in the investment scenario towards a sustainable energy supply due to its proven excellence as an engineering company”.

The strengthening of the balance sheet with the recent financing package from SEPI will help the company to be part of this growth scenario. This support has confirmed the strategic nature of the company for the Spanish economy, with Madrid as its centre of excellence in engineering from where it exports worldwide its know-how in energy technologies.

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