Technip Energys reduces margin outlook as Middle East hits deepens
Technip Energies, a French engineering and technology firm, cut its 2026 outlook on Thursday due to disruptions at Middle Eastern projects. These disruptions - along with related provisions - drove the second quarter core earnings below expectations. This was despite record orders.
The adjusted recurring earnings, before interest, taxes, depreciation, and amortisation, fell?60% from 156.9 to 63.5 millions euros (72.3 million dollars) a year ago, far below the consensus of 152 million euro expected by the company.
Revenue increased by 4%, to 1,87 billion euros. This was below analysts' expectations for 1,92 billion euros.
This is a marked improvement from April, when Technip described the Middle East conflict primarily as causing a delay in project activity and revenue. It now recognises provisions for disputed items as well as additional logistics, safety, and business continuity costs.
Technip stated that its projects in the area remained fully mobilised, and activity has?stabilised. However, it warned that the amount of cost recovery and the timing under contractual protections will depend on the?evolution of the conflict and the discussions with customers.
The company has cut its EBITDA margin for 2026 in its Project Delivery division from 6.5%-7.5% to above 5%. Revenue guidance remains at 5.7 to 6.3 billion euro.
The new outlook assumes that current market conditions will continue through the end of the year.
Project Delivery EBITDA dropped from 100.9 to 23.8 millions euros, and its margin fell to 1.7%, down from 7.6%. This is despite an increase of 7% in revenue, to 1,42 billion euros.
Technip raised its margin outlook for its Technology, Products and Services division to 15% from 14.5% following a quarterly?EBITDA (or earnings before interest and taxes) of 69 millions euros and a 15.4% margin.
The first-half order intake was 12.7 billion euro, bringing the backlog up to 25 billion euro from 16 billion euro at the end 2025.
The 'backlog' of?14.4bn euros is not scheduled until 2028 or beyond. This means that the benefits will be delayed and may not offset any immediate pressure on Project Delivery margins.
(source: Reuters)
