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MarketScreener Homepage  >  Equities  >  Bolsa de Madrid  >  Técnicas Reunidas, S.A.    TRE   ES0178165017

TÉCNICAS REUNIDAS, S.A.

(TRE)
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Tecnicas Reunidas S A : The company sends information regarding 2020 First Quarter Results

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05/25/2020 | 02:43am EDT

FIRST QUARTER RESULTS

January - March 2020

CONTENTS:

  1. Highlights
  2. Backlog
  3. Consolidated Income Statement
  4. Consolidated Balance Sheet

Appendix: Alternative Performance Metrics

First Quarter Results

January - March 2020

1. MAIN HIGHLIGHTS

  • Backlog of €10.9 billion
  • Q1 2020 Order intake of €1.9 billion
  • Sales at €1,181 million
  • Operating profit (EBIT) at €23.7 million, with a 2.0% EBIT margin
  • Net profit at €8.7 million
  • Net cash position of €419 million

Backlog at the end of March stood at €10.9 billion. In Q1 2020, the main award added to the backlog was the important refining project for Sonatrach at Haoud el-Hamra, Hassi Messaoud (Algeria), with a value of $2 billion for Técnicas Reunidas.

Total sales reached €1,181 million in Q1 2020, growing 29% versus Q1 2019. Sales in the last month of the quarter were slightly affected by Covid-19 disruptions.

Q1 2020 EBIT was €23.7 million, that compares to the Q1 2019 EBIT of €10.6 million, with an increase of 124% year on year. Growth in operating profit was favoured by the contribution of newer projects with healthier margins and despite the slowdown of project execution due to Covid in the last month of the quarter.

Net profit in Q1 2020 reached €8.7 million, a 134% higher than in the same period of last year.

Net cash position at the end of March stood at €419 million. The healthy cash position reflects the maintenance of a good progress in working capital, with no cash downpayments being received in the quarter.

Outlook and Guidance for 2020

At present, it is very difficult to accurately assess the concrete dimension of the Covid- 19 impacts. As a consequence, we have decided to temporarily suspend our quantitative guidance for the year 2020 until the level of uncertainty diminishes. Nonetheless, we still feel highly confident in the good evolution of sales and margins throughout 2020, as we are executing a strong backlog, and margins are further supported by optimisation and efficiency measures and the progression of newer projects. The company will restate a quantitative guidance for 2020 in future quarterly result presentations, as soon as there is sufficient stability in the economic environment.

2

First Quarter Results

January - March 2020

Juan Lladó, Técnicas Reunidas Chief Executive Officer, commented:

"We are living unprecedented times, which are a real test to all of us. I am highly satisfied with how Técnicas Reunidas has been able to respond to this challenge. Once secured the safety of our employees, clients and suppliers, we have swiftly moved to put all our technological and human capacities to work to ensure business continuity and deliver the best solutions for our customers.

I think we have done a good job in all those fronts. We have immediately adapted to smart work by ramping up all our digital and communication processes, already achieving high productivity levels in engineering. We are also thankful to our clients for the results achieved: their strong management capacities and their trust in TR are being key in efficiently adapting project execution to the new environment.

It is difficult to assess the final, exact impact of this crisis on any company. However, in our case, we start from a very solid foundation, provided by a robust backlog that ensures a high level of activity for several years. The pace of execution, in some cases, has slowed, as we are adapting to client needs and to the logistical and operating difficulties derived from the pandemic. Nevertheless, the good news are that we are currently working on every single project in the backlog, a sign of the soundness of the projects and financial strength of our clients, the major players in our industry.

Regarding our current bidding pipeline, we are only facing time delays and not project cancellations. Furthermore, we expect a stronger resilience in refining, petrochemicals and natural gas projects, as well as in projects in the Middle East. We have a strong focus on those sectors and on this region.

I feel fully confident on our capacity to face the difficulties, as managing complexity is in the DNA of our company. That confidence is also supported by a solid initial backlog and liquidity position, as well as by the efficiency measures that Técnicas Reunidas is implementing and that will bear fruit in the next quarters. Times will not be easy, but I am definitely sure that we will emerge from this major disruption as a stronger company."

3

First Quarter Results

January - March 2020

The main figures for the quarter are the following ones:

HIGHLIGHTS

Q1 2020

Q1 2019

Var.

Year 2019

January - December

€ million

€ million

%

€ million

Backlog

10,915

10,034

9%

10,026

Net Revenues

1,181

915

29%

4,699

EBITDA (1)

35.4

19.9

78%

110.2

Margin

3.0%

2.2%

2.3%

EBIT (1)

23.7

10.6

124%

68.2

Margin

2.0%

1.2%

1.5%

Net Profit (2)

8.7

3.7

134%

-10.0

Margin

0.7%

0.4%

-0.2%

Net Cash Position (1)

419

219

91%

371

  1. Figures classified as Alternative Performance Metrics ("APMs"). See appendix.
  2. Profit for the year from continuining operations

Técnicas Reunidas will hold a conference call today at 16:00 CET. It can be accessed

through the link in its homepage http://www.tecnicasreunidas.es/en/

4

First Quarter Results

January - March 2020

2. BACKLOG

Project

Country

Client

ExxoMobil´ refinery

Singapore

ExxonMobil

Petrochemical

Sitra refinery

Bahrain

BAPCO

Baku refinery

Azerbaijan

SOCAR

Duqm refinery

Oman

DRPIC

Ras Tanura refinery

Saudi Arabia

Saudi Aramco

and

Al Zour refinery

Kuwait

KNPC

Minatitlán refinery

Mexico

Pemex

Refining

Talara refinery

Peru

Petroperu

Jazan refinery*

Saudi Arabia

Saudi Aramco

Polyethylene plant

Canada

Nova Chemicals

Hassi Messaoud refinery

Algeria

Sonatrach

Marjan

Saudi Arabia

Saudi Aramco

& Gas

Bu Hasa

United Arab Emirates

ADNOC Onshore

Das Island

United Arab Emirates

ADNOC LNG

Upstream

GT5

Kuwait

KNPC

Haradh

Saudi Arabia

Saudi Aramco

Fadhili*

Saudi Arabia

Saudi Aramco

Jazan IGCC*

Saudi Arabia

Saudi Aramco

Sewa

United Arab Emirates

Sumitomo / GE EFS

Power

Biomass plant

UK

MGT Teeside

Turów

Poland

Polska Grupa Energetyczna

Tierra Mojada*

Mexico

Fisterra Energy

Kilpilahti*

Finland

Neste / Veolia / Borealis

* Project in mechanical completion or carrying out services for the start up phase of the plant

Backlog as of March 31st ,2020

At the end of March 2020, Técnicas Reunidas' backlog amounted to € 10.9 billion, 9% higher compared to the € 10.0 billion reached at the end of December 2019. Oil and Gas projects comprised 95% of the total backlog, whereas the Power division accounted for 5%.

Q1 2020 order intake was € 1.9 billion, the main awards added to the backlog in the first quarter was the Sonatrach project in Algeria.

In January, Sonatrach, the Algerian National Oil Company, and Técnicas Reunidas signed a contract for the execution of project for a grassroots refinery, at Haoud el- Hamra, Hassi Messaoud, in Algeria. The project will be executed in a Joint Venture (JV) with Samsung Engineering Ltd. Co. Técnicas Reunidas will be the leader of the JV, with a 55% share.

The contract has an approximate total value of US$ 3,700 million, with the share of TR exceeding US$ 2,000 million. The new refinery will have a processing capacity of five million tons/year.

5

First Quarter Results

January - March 2020

The scope of the project includes the execution of a completely new refinery, including all the process and environmental units, as well as the necessary auxiliary services. The project includes some of the most advanced processing units, with technologies that are targeted to deep conversion, clean fuel production and fulfilment of stringent environmental requirements.

The Hassi Messaoud project is one of the largest investments made in Algeria and is part of an ambitious program, with the objective of increasing the local production of energy products to meet with Algeria's increasing demand, while adapting oil products internally consumed to European environmental standards (Euro V). The design and execution of the plant will aim to fulfil the most stringent safety and environmental standards.

6

First Quarter Results

January - March 2020

3. CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT

Q1 2020

Q1 2019

Var.

Year 2019

January - December

€ million

€ million

%

€ million

Net Revenues

1,180.7

914.5

29.1%

4,699.1

Other Revenues

0.6

1.5

7.8

Total Income

1,181.3

916.0

29.0%

4,706.9

Raw materials and consumables

-926.3

-664.3

-3,679.5

Personnel Costs

-161.1

-164.7

-610.8

Other operating costs

-58.6

-67.0

-306.4

EBITDA

35.4

19.9

77.9%

110.2

Amortisation

-11.7

-9.3

-42.1

EBIT

23.7

10.6

123.7%

68.2

Financial Income/ expense

-11.3

-3.6

-12.6

Share in results obtained by associates

0.0

-1.3

0.3

Profit before tax

12.4

5.7

116.6%

55.8

Income taxes

-3.7

-2.0

-65.8

Profit for the year from continuining operation

8.7

3.7

134.5%

-10.0

Profit (loss) from discontinued operations

0.0

0.0

0.0

Profit for the year

8.7

3.7

134.5%

-10.0

Non-controlling interests

-1.6

0.2

-0.8

Profit Attibutable to owners of the parent

7.1

4.0

79.4%

-9.2

3.1 REVENUES

REVENUES BREAKDOWN

Q1 2020

%

Q1 2019

Var.

Year 2019

January - December

€ million

€ million

%

€ million

Oil and gas

1,080.5

91.5%

829.1

30.3%

4,273.5

Power & Water

75.7

6.4%

63.1

20.0%

330.9

Other Industries

24.4

2.1%

22.3

9.3%

94.7

Net Revenues

1,180.7

100%

914.5

29.1%

4,699.1

In Q1 2020, net revenues were € 1,181 million, +29.1% higher than 1Q 2019 sales, despite the slowdown in execution in March due to the effects of Covid-19. Year on year, the higher sales figure reflects the steady progress in the contribution to sales of the growing backlog.

Sales from the oil and gas division went up 30.3% and reached € 1,081 million in Q1

2020. Oil and Gas revenues represented the vast majority of total sales (92%):

  • Refining and Petrochemical:The projects with the highest contribution to
    sales were the following: Duqm for DRPIC (Oman), conversion project for BAPCO (Bahrain), Ras Tanura for Saudi Aramco (Saudi Arabia) and Singapore project for ExxonMobil.
  • Upstream and Natural Gas:The main contributors to sales were: the Haradh project for Saudi Aramco (Saudi Arabia) and the ADGAS project for ADNOC LNG and Bu Hasa project for ADNOC ONSHORE both in United Arab Emirates.

7

First Quarter Results

January - March 2020

Revenues from the power division stood at € 76 million in Q1 2020, increasing by 20% year on year. This division has been affected by the slowdown in the execution of the UK power project, impacted by Covid factors.

3.2 OPERATING AND NET PROFIT

OPERATING AND NET PROFIT

Q1 2020

Q1 2019

Var.

Year 2019

January - December

€ million

€ million

%

€ million

EBITDA

35.4

19.9

77.9%

110.2

Margin

3.0%

2.2%

2.3%

EBIT

23.7

10.6

123.7%

68.2

Margin

2.0%

1.2%

1.5%

Net Profit*

8.7

3.7

134.5%

-10.0

Margin

0.7%

0.4%

-0.2%

*Net Profit from from continuining operations

EBIT BREAKDOWN

Q1 2020

Q1 2019

Var.

Year 2019

January - December

€ million

€ million

%

€ million

Operating Profit from divisions

48.9

35.3

38.4%

170.7

Costs not assigned to divisions

-25.2

-24.7

1.8%

-102.5

Operating profit (EBIT)

23.7

10.6

123.7%

68.2

Financial Income/Expense

Q1 2020

Q1 2019

Year 2019

January - December

€ million

€ million

€ million

Net financial Income *

-7.7

-0.9

-0.5

Gains/losses in transactions in foreign currency

-3.6

-2.7

-12.1

Financial Income/Expense

-11.3

-3.6

-12.6

* Financial income less financial expenditure

EBITDA for the first quarter of 2020 was € 35.4 million, and EBITDA margin reached 3.0%. Q1 2020 EBIT was € 23.7 million, with an operating margin of 2.0%. Growth in operating profit was favoured by the contribution of newer projects with healthier margins which overcome the small slowdown of project execution due to Covid in the quarter.

Net profit was € 8.7 million, compared to € 3.7 million in the first quarter of 2019. Net profit reflects also the effect of financial results and taxes:

  • Financial results decreased due to negative mark to market of financial assets and the negative sign of the transactions of foreign currency from the dollar appreciation versus the euro.

8

First Quarter Results

January - March 2020

  • In the first quarter, the accounted company income tax was €3.7 million, which represents an effective tax rate of 30%.

4. CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET

Q1 2020

Q1 2019

Year 2019

March 31st

€ million

€ million

€ million

ASSETS:

Non-current Assets

Tangible and intangible assets

143.9

143.8

148.5

Investment in associates

3.4

11.4

3.4

Deferred tax assets

388.2

318.7

387.4

Other non-current assets

95.1

92.9

92.3

630.6

566.9

631.7

Current assets

Inventories

5.4

24.2

5.5

Trade and other receivables

2,922.0

2,533.7

2,672.1

Other current assets

27.7

23.3

18.3

Cash and Financial assets

1,081.8

748.2

952.8

4,036.9

3,329.4

3,648.6

TOTAL ASSETS

4,667.5

3,896.2

4,280.3

EQUITY AND LIABILITIES:

Equity

310.5

352.0

Non-current liabilities

265.5

465.3

Financial Debt

161.4

378.4

Other non-current liabilities

104.1

86.9

Long term provisions

33.7

43.6

Current liabilities

4,057.8

3,035.3

Financial Debt

501.6

150.6

Trade payable

3,348.1

2,748.9

Other current liabilities

208.1

135.9

Total liabilities

4,357.0

3,544.2

TOTAL EQUITY AND LIABILITIES

4,667.5

3,896.2

EQUITY

Q1 2020

Q1 2019

March 31st

€ million

€ million

Shareholders' funds + retained earnings

412.8

430.7

Treasury stock

-73.5

-73.4

Hedging reserve

-43.0

-18.7

Interim dividends

0.0

0.0

Minority Interest

14.3

13.4

EQUITY

310.5

352.0

330.0

388.8

296.5

92.3

34.3

3,527.1

285.8

2,978.6

262.7

3,950.3

4,280.3

Year 2019

  • million
    415.3 -73.8-24.2 0.0 12.7
    330.0

9

First Quarter Results

January - March 2020

NET CASH POSITION

Q1 2020

Q1 2019

Year 2019

March 31st

€ million

€ million

€ million

Current assets less cash and financial assets

2,955.2

2,581.1

2,695.8

Current liabilities less financial debt

-3,556.3

-2,884.7

-3,241.4

COMMERCIAL WORKING CAPITAL

-601.1

-303.6

-545.5

Financial assets

58.9

65.6

65.1

Cash and cash equivalents

1,022.9

682.6

887.6

Financial Debt

-662.9

-529.0

-582.3

NET CASH POSITION

418.8

219.2

370.5

NET CASH + COMMERCIAL WORKING CAPITAL

-182.3

-84.4

-175.0

At the end of March 2020, equity of the company was € 310.5 million, slightly below the end of December of 2019 figure, as the negative hedging reserves account increased.

Net cash position stood at € 418.8 million, growing by 48.3 million from the end of December 2109. The progress in the net cash position reflects the evolution of working capital, and it was achieved despite no major downpayments were received during the quarter. Cash levels are linked to the company's exposure to current client payment terms of the Middle East region.

10

First Quarter Results

January - March 2020

IFRS 16: 1Q 2020 Reconciliation

Q1 2020

Q1 2020

IMPACT

Adjusted

€ Million

IFRS 16

EBITDA

35.4

5.4

30.1

DEPRECIATION

11.7

5.2

6.5

FINANCIAL CHARGES

11.3

0.1

11.2

NET INCOME

8.7

0.0

8.7

"RIGHT OF USE" ASSETS

36.8

36.8

0.0

SHORT-TERM LEASE LIABILITIES

11.8

11.8

0.0

LONG-TERM LEASE LIABILITIES

25.9

25.9

0.0

APPENDIX: ALTERNATIVE PERFORMANCE METRICS ("APMS")

1. EBITDA ("Earnings Before Interest, Taxes, Depreciation and Amortization") is a financial indicator used by Management to measure the Group´s ability to generate profits considering only its operations and allows the comparison with other oil services sector companies. It is calculated by deducting from the operating profit, the amortisation and impairments.

Concept

Definition

Mar 20

Mar 19

(+) Revenues

Revenues and other income

1,181.3

916.0

(-) Operating expenses

Raw materials and consumables, employee benefit

expense, other expenses, depreciation/amortisation

-1,157.6

-905.4

and impairment charges

= Operating income

Revenues - Operating expenses

23.7

10.6

(+) Depreciation/amortisation and impairment charges

Depreciation/amortisation and impairment charges

11.7

9.3

EBITDA

Operating income excluding depreciation and

35.4

19.9

amortisation

2. EBIT is defined as "Earnings Before Interest and Taxes": It is an indicator of the operating income of the group prior deducting interest and taxes. This indicator is

11

First Quarter Results

January - March 2020

used by Management, together with EBITDA, when comparing to other oil services sector companies. EBIT is equivalent to the "operating profit". Its calculation was as follow:

Concept

Definition

Mar 20

Mar 19

(+) EBITDA

Operating income excluding depreciation and

35.4

19.9

amortisation

(-) Amortisation and depreciation expenses

Depreciation/amortisation and impairment charges

-11.7

-9.3

EBIT

Operating income

23.7

10.6

3. Net Cash is the alternative performance metric, used by Management, to measure the level of liquidity of the Group. It is calculated as the difference between "cash and cash equivalents" plus "financial assets at fair value through profit or loss" deducting the "financial debt" (including "financial debt linked to assets classified as held for sale"). Cash and equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. The calculation has been as follow:

Concept

Definition

Mar 20

Mar 19

(+) Cash and equivalents

Cash in hand, deposits held at call with banks, other

short-term highly liquid investments with original

1022.9

682.6

maturities of three months or less

(+) Financial assets at fair value

Financial assets at fair value through profit and loss

58.9

65.6

(-) Financial debt

Short-term and long-term debt with credit entities

-662.9

-529.0

Borrowings related to the assets classifies as held for

0.0

0.0

sale

NET CASH

Cash and equivalents (+) Financial assets at fair

418.8

219.2

value (-) financial debt

12

First Quarter Results

January - March 2020

Disclaimer

This document has been prepared by Técnicas Reunidas S.A. (the Company) solely for use at presentations held in connection with the announcement of the Company's results for the first nine months of 2019.

This document contains forward-looking statements of the Company and/or its management. These forward-looking statements such as statements relating to the Company's or management's intent belief or current expectations of the future growth in the Company's business and capital expenditure in the oil and gas industry in general are subject to risks and variables that are beyond the Company's control and that could materially and adversely affect the outcome and financial effects of the facts expressed implied or projected herein.

The Company is under no obligation to update or keep current the information contained in this presentation including any looking forward-statements or to correct any inaccuracies that may later become apparent.

No representation or warranty express or implied is made as to and no reliance should be placed on the fairness accuracy completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates advisors or representatives shall have any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection with this document.

This document is only provided for information purposes and does not constitute nor may it be interpreted as an offer to sell or exchange or acquire or solicitation for offers to purchase any share in the Company. Any decision to buy or invest in shares in relation to a specific issue must be made on the basis of the information contained in the relevant prospectus filed by the Company in relation to such specific issue.

13

Disclaimer

Tecnicas Reunidas SA published this content on 25 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 May 2020 06:42:04 UTC

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Financials
Sales 2020 4 875 M 5 501 M 5 501 M
Net income 2020 73,7 M 83,1 M 83,1 M
Net cash 2020 307 M 346 M 346 M
P/E ratio 2020 10,6x
Yield 2020 3,22%
Capitalization 750 M 847 M 846 M
EV / Sales 2019
EV / Sales 2020 0,09x
Nbr of Employees 9 386
Free-Float 55,8%
Chart TÉCNICAS REUNIDAS, S.A.
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Technical analysis trends TÉCNICAS REUNIDAS, S.A.
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TrendsBearishNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 11
Average target price 22,01 €
Last Close Price 13,96 €
Spread / Highest target 126%
Spread / Average Target 57,7%
Spread / Lowest Target 16,8%
EPS Revisions
Managers
NameTitle
Juan Lladó Arburúa Executive Chairman
Felipe Revenga López Chief Operating Officer
Eduardo González de Heredia San Miguel Chief Financial Officer
Fernando de Asúa Álvarez Third Vice Chairman
Javier Alarcó Canosa Independent Non-Executive External Director
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