Good afternoon. This is the Chorus Call operator. Welcome, and thank you for joining the Maire Tecnimont Nine-Month 2022 Financial Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alessandro Bernini, CEO of Maire Tecnimont. Please go ahead, sir.
Good afternoon, everyone, and thank you for attending the nine months of 2022 financial results conference call. The first nine months of 2022 have shown a solid and growing financial performance as revenues and EBITDA have grown at double-digit rates versus the corresponding period last year. Our green energy business continues to grow at a significant pace, with revenues of EUR 202 million, up almost 4x , and a record backlog of about EUR 1.2 billion, which has increased more almost five-fold over one year. This solid financial performance has been accompanied by a very strong cash flow generation of EUR 213.6 million, which has led to an adjusted net cash of EUR 65.3 million. This is the tenth consecutive quarter of improvement in the net financial position.
Our EUR 8 billion backlog, net of all the Russian projects that will no longer be included from now on, continues to be extremely healthy and well diversified, and the group is not dependent on any single geography. A 2.8 backlog cover makes us confident about our immediate future. At the same time, our business drivers continue to remain solid, as reflected in a commercial pipeline worth almost EUR 54 billion, of which almost EUR 8 billion in green energy. In conclusion, we are successfully executing projects while energy transition is taking off. Our main consolidated financial results and KPIs are shown on page four and will be discussed in more detail later by Fabio in the presentation. Before we discuss our operational performance, we'd like to give you an update on our Russian projects.
As communicated last July, no economic contribution was recorded in Q3 as project was suspended in the course of the second quarter. Moreover, as the premises that led to the suspension have not changed over the last few months, projects have been or are in the process of being terminated. As a consequence, Amursky II and Kingisepp II have been taken out of the backlog as of September 30, and the Russian backlog is now close to zero. Please note that all historical figures relating to the backlog presented in this document have been adjusted in order to exclude the Russian projects in order to facilitate the comparison on a like for like basis. Contractual conditions related to the terminations due to sanctions will be applied as customary. Finally, we confirm that the project financial position continues to remain in equilibrium as communicated throughout the year.
Now let's analyze our operational performance. Our order intake up to the end of September was EUR 1.6 billion. This year's intake has been extremely diversified, both in terms of geographical locations, contract type, and business. This is thanks to a healthy commercial pipeline that continues to offer a variety of interesting prospects all over the world. Moreover, our increasing success in green energy is demonstrated by the fact that half of the entire nine months order intake is in this business line, a testament of the validity of our technological leadership in the energy transition. This virtuous path has continued this month with over EUR 450 million of new orders, leading to the overall total to date to about EUR 2.1 billion.
Based on the various ongoing tenders that we have submitted, we are fully confident to further increase this year's order intake and reach a book-to-bill ratio of at least one. Let's take a look now at the Rhourde El Baguel project in Algeria that we just announced a few hours ago. This morning, we were awarded a $380 million EPC contract by Sonatrach. The project is related to the execution of a liquefied petroleum gas extraction plant inside the already existing Rhourde El Baguel oil and gas treatment complex situated in the northeastern Algeria. The project scope of work entails the implementation of a new LPG extraction plant that once completed, we'll have capacity to process 10 million metric standard cubic meters per day of associated gas coming from the existing facilities.
The planned completion is scheduled within 36 months from the contract's effective date. The objective is to increase the LPG and condensate production of the existing gas treatment complex. The majority of the construction is expected to be performed by local subcontractors, representing a significant contribution to the in-country value development in the area. This is a very strategic project that reaffirms our track record with Sonatrach and confirms our leading position in gas monetization. As previously commented, the Russian projects have been taken out of the backlog in the course of this year. In particular, Amursky II and Kingisepp II have been removed in Q3, in addition to Amursky I , which had already been taken out. In order to have a comparison on a like-for-like basis, however, we also adjusted the backlog data at the end of June by taking out the corresponding amount for the Russian projects.
The result is a slight decrease of about EUR 250 million. The decrease in hydrocarbons due to these adjustments, however, is almost fully compensated by an increase in the green energy backlog, thanks to the various energy transition projects which were acquired this year. Moreover, the order intake of the last couple of years has made the backlog even more geographically diversified than ever. We feel there is a good balance between the Middle East, our strongest historical area, and the other regions in the world, from Europe to Africa, Asia, and North America. Let's focus now on our two business units, starting from our core business. The E&C and the E&P portion of the hydrocarbons backlog has remained relatively stable at over EUR 600 million. This continues to contribute to the de-risking of our existing business, a very relevant factor in these volatile times.
The backlog cover is 2.8x , providing a very high visibility for the future. Moving on to the commercial opportunities in our core business, our pipeline has increased to EUR 46.1 billion at the end of September, up EUR 5.5 billion this year. The last quarter has seen a significant increase in the new initiatives about to be tendered, driven by the resilience of our core business, strongly supported by powerful business drivers. Such a positive environment bodes well for our group's growth prospects in the years ahead. All the geographies where the group is active continues to remain extremely attractive. In particular, the Middle East continues to remain an area of incredible opportunities, driven by a new wave of downstream projects.
At the same time, we are witnessing an increase in activity in North America, driven by an abundance of gas as a feedstock for fertilizer plants, as well as renewed investment in other gas monetization plays. Asia is also an area that continues to show significant potential. Overall, our pipeline remains extremely strong and geographically diversified, continuing to provide a solid support to future awards in the short and medium term. Let's move now to the green energy business unit and our efforts in the energy transition and sustainability. We continue to grow our green energy business, offering our clients sustainable solutions to enable them to successfully face the energy transition challenges. In this respect, half of the nine months order intake is represented by energy transition projects, as we highlighted earlier in the presentation.
We have been awarded contracts not only by historical clients, but also and especially by new customers. They are all working to transform their processes and their products in order to tackle the climate change challenge. We are particularly active in the area of low carbon fertilizers and green hydrogen, with several engineering and EPC awards across the globe. Biogas, sustainable aviation fuel, and second generation ethanol are another area that we are actively pushing, also thanks to our international partnerships. Last but not least, we are increasingly playing a relevant role in circular economy, thanks to our unparalleled skills and competence. In this respect, let's take a closer look at the Waste-to-Hydrogen project in Rome, which is going to benefit from a significant EU grant that was just assigned to NextChem.
We are extremely proud that NextChem has been assigned a EUR 194 million grant for the development of a Waste-to-Hydrogen plant as a part of the IPCEI Hy2Use EU project, especially considering that only EUR 500 million have been assigned to Italian projects overall. The project sets up the Hydrogen Valley in Rome, the first industrial scale technological hub for the development of the national supply chain for the production, transport, storage, and use of hydrogen for the decarbonization of industrial processes and for sustainable mobility. Thanks to the proprietary technology developed by NextChem, the plant will use 200,000 tons per year of non-recyclable solid waste as a feedstock to produce circular ethanol and circular hydrogen, the latter at a competitive cost compared to traditional hydrogen production from fossil fuels.
The project will also contribute to the optimization of the waste treatment cycle in Rome through a conversion process that will significantly reduce total CO2 emissions. As a matter of fact, following the life cycle assessment approach, which calculate CO2 emission from the raw material to the final use of the products, our waste to ethanol and hydrogen technology produces fuel, saving beyond 70% of greenhouse gas emissions compared with traditional process, and the hydrogen produced can be considered EU taxonomy aligned. NextChem is acting as the promoter of this important initiative. As such, we are actively having conversations with qualified leading industrial players and the strategic infrastructure funds about the future equity structure, where we may consider retaining a minority investment. In the meantime, as announced last Monday, engineering design activities have been started, also including the award of the process design contract for the circular ethanol unit.
We will keep you updated on this exciting project as developments will take place. All these significant and diversified new projects have translated into a sizable increase in the green energy backlog, which has gone up 5x over the last 12 months to almost EUR 1.2 billion. Such an increase has already translated to higher revenues and EBITDA, a trend that is expected to grow in the future. The backlog is widely diversified, with projects spread equally between Europe, the Americas, and Asia. The other side of the coin of the green energy expansion is given by an increasing commercial pipeline. As of the end of last June, we were pursuing opportunities worth EUR 7.7 billion, up from EUR 1.1 billion this year.
While Europe remains the target geography, we are experiencing an increase in opportunities in other areas, such as in Asia and in the Americas. I now hand over the microphone to Fabio, who will discuss our financial performance in more detail.
Thank you, Alessandro. Our nine-month revenues grew 22.6% to EUR 2.5 billion. Such an increase is mainly due to last year's acquisitions starting to provide a top-line contribution to our top line. EBITDA profit was EUR 214.3 million, up 14.2% thanks to the revenues increase. G&A were EUR 56.6 million, a decrease of about EUR 1 million or 1.4%. This remarkable achievement is due to our continuous attention to cost improvements across our organization. As a result, the percentage of these expenses over the revenues has decreased from 2.8% to 2.2% over the last year. R&Ds have increased by over 3%, mainly driven by our green energy expansion.
EBITDA was EUR 151.5 million, up 22% with a profitability of 6%, in line with the previous quarters and with this year's guidance. Net financial charges were EUR 26.4 million and were mainly impacted by a higher derivative mark-to-market valuation, also related to the tools in place for the buyback of our own shares, and by a marginal increase of the gross debt. Such a positive operating performance has led to a consolidated net income of EUR 61.4 million, up 7.2%, and the group net income of EUR 61 million, up about 1%. Moving on to the balance sheet, let's analyze the cash flow dynamics. Our adjusted net financial position has improved for the 10th consecutive quarter and now stands at EUR 65.3 million.
Such an improvement has been driven by a significantly healthy cash flow generation of EUR 213.6 million in the nine months as projects started to shift gears in the second quarter and delivered over EUR 180 million of cash flows in the last two quarters. This positive cash generation more than compensated EUR 60 million in dividends and EUR 97 million in additional outflows due to taxes, net financial charges, CapEx, and acquisition of treasury shares. We expect this vehicle's strength to continue in line with the guidance provided at the end of February. Let us now take a look at the working capital analysis. Working capital has improved by about EUR 132 million to negative EUR 137.8 million.
Such an improvement has been mainly driven by the positive effects of project advancements on accounts receivables and payables and advances to suppliers. This drop is further proof of the ability of our projects to generate cash, as well as the effectiveness of our working capital management. Please remember that our net working capital was positive EUR 208.8 million at the end of March 2020. This implies an improvement of over EUR 420 million in two and a half years. I now hand over the microphone to Alessandro for his concluding remarks. Alessandro.
Thank you, Fabio. Before moving to our final remarks, let me provide you with an anticipation about how we are modifying our market approach. Our group has always been very fast at responding to the ever-changing external environment, and our business structure has evolved over time to adapt to these transformations. Our core business has always been in energy services, serving our client in the downstream business. Our leadership position in the petrochemical, fertilizer, and oil and gas refining is undisputed. Our competitive advantage has always relied on a comprehensive and significant proprietary technological platform driven by almost 2,000 patents. For this reason, following the implementation of a new strategic approach in 2014, we put technologies at the center of our organization as the key and clear differentiating factor vis-à-vis our competitors.
Clients were choosing Maire Tecnimont for its technological DNA and the value added that we would bring in delivering energy services solution. By the end of 2018, the launch of NextChem represented an important disruption event, whereby we grouped our existing energy transition activities and competencies under the green energy business unit, which started to represent our main platform to develop our energy transition efforts. We were the absolute first among our peers to make this move, which was supported by our existing in-house capabilities and anticipated a trend that would become more obvious a few years later. The move towards a world defined by energy transition is now clear and evident, and the green acceleration is taking place right now. For this reason, our clients are increasingly demanding EPC solutions that are more and more integrated, helping them to successfully face and anticipate these energy transition trends.
The synthesis of these market trends and demands is that the key to win will be the ability to apply and integrate these different EPC and technological solution across a wide variety of industries and geographies, each of them with their own peculiarities and characteristics. The combination of a technological DNA coupled with expertise and proactive problem-solving culture is already giving us the chance to compete in the Premier League, if you allow me a soccer analogy. Only those who can master different technology and know how to efficiently apply them will be able to stay on top. We have been dealing with these issues for the last few years as we started to develop and integrate our energy transition expertise into our traditional business. Developing successful EPC solutions means putting together our projects and risk management capabilities, which will result in superior project execution and integrated solution.
Being a leading technology solution providers means building together all the value-added activities centered around the development and deployment of proprietary and third-party technologies, as well as proprietary equipment, to offer our clients the best sustainable technological solutions. As we move forward towards an energy transition world, we are enhancing our competencies, which, while being very focused, are strictly interrelated among each other in order to leverage cross-fertilization of ideas and synergies under the same group. As a consequence of what we have just explained and to better represent the business evolution towards energy transition, we will adjust our reporting system to reflect on one side, sustainable integrated E&C solutions that carry higher volumes, EBITDA and margins, and E&C on the other side, sustainable technology solution characterized by lower volumes but higher margins and higher growth rates.
This change will be implemented starting with the full year 2022 financial results. More details will be provided to all of you in due course. Moving now to the final remarks. Having said that, the nine months financial results have confirmed the pick-up in pace, which is showing a double-digit growth. Our energy transition business continues to develop significantly as new projects have been awarded and started, leading to a more than four-fold increase in the backlog over the last 12 months. Overall, our total backlog is providing a solid foundation to 2023 revenues and beyond, both in the traditional and in the energy transition business. At the same time, our strong and growing commercial pipeline, supported by our leading technology portfolio, will continue to deliver new projects.
As such, we expect the full year ordering take to grow over the next couple of months, leading to a book-to-bill ratio of at least one and backing a further growth for the year end. As a result, we reconfirm our 2022 guidance that was communicated to the market on February 25, namely, revenues in the range of EUR 3.4 billion-EUR 3.6 billion, EBITDA profitability in line with the last few quarters and an improving net cash position. We will continue to consolidate our overall growth while expanding our existing energy transition business to higher levels. This concludes our presentation, and Fabio and I stand ready to answer any question you may have.
Thank you. This is the Chorus Call conference operator. Well, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask that you use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from James Winchester with Bank of America. Please go ahead.
Good afternoon, gents. Thank you for that. I just wanted to talk about contract assets again. In your annual report you wrote that you expected the trend of growing unbilled receivables to turn around in the coming quarters. There was only one quarter of decline. Can you provide a bit of color on what didn't materialize that you expected at the beginning of the year? Secondly, in parallel to that, you know, trade payables are now about EUR 2 billion. I know previously you mentioned that this is because you're waiting to get paid. Can I just confirm that you've basically agreed with every subcontractor that they won't get paid unless you do? The final one is, could you just provide a bit of detail on the use of factoring and reverse factoring for Maire Tecnimont? Thank you.
Yeah. Let me start with the last question you made on factoring and reverse factoring. I understand your second question was on trade payables. If you can rephrase the second question you made for a second. Let me start and then maybe you can rephrase. Factoring and reverse factoring have been in use since quite some times at Maire Tecnimont. It's the proper tool in a way to pre-discount receivables from clients and be able to grant a steady flow of cash flows that you see in our reporting.
As you know very well, our business is not a business where you can predict the steady growth over time because you have sometimes certain cash in or cash out which can make a huge difference from quarter to quarter. We have always been using working capital tools, trade finance tools to smoothen the curve. It is the case with factoring, which allows us to anticipate cash flows due in other periods, just again, to be able to provide a smooth growth of the cash in, as well as reverse factoring to our suppliers, which are able to, as trade finance tools, to give us two advantages. First of all, we can delay the payment to suppliers in case of delaying the cash in.
Second, we give our supplier base certainty of payment. In a way, when we give a supplier certainty of payment through reverse factoring, you are also able to negotiate better conditions. There is also a tool to become more efficient in the supply management. The other question was on. Let me provide you with an answer with respect, in particular, to the value of the contract assets, which has been and I'm realizing is still of a lot of interest of everybody.
As you have appreciated, we have maintained more or less the same amount which we have experienced by the end of June, despite the significant increase in the volumes of our operations, because in the third quarter we have generated more than EUR 900 million in terms of production, which represent an important milestone for the growth of our group. Of course, you know, it is the possibility to manage and to reduce the contract assets depends on the contractual conditions defined with the client in terms of possibility to invoice the various milestones. Now, since we have ongoing different packages, different projects, giant projects in particular in Nigeria, in particular in Middle East, in particular in Europe as well as in U.S.
Of course, before being in a position to release the invoicing, it is necessary to reach the milestone agreed with the client, which, you know, depends on and since the contract assets represent the progress at a certain standpoint, in this case, thirteenth of September, it means that in some circumstances it was not yet possible to bill them, the client with the work that we have done. Having maintained the same amount that we have experienced three months ago when the level of volumes was absolutely lower than what we had, we are experiencing and delivering so far, it is a great result because it means that we are managing properly all the works that we are providing to the client as well as the billing facilities.
A second, please.
I don't know if there is something else that we have lost.
No. I mean, just in terms of the contract assets, I mean, the point that I was trying to make was, you know, you kind of knew what your revenue was gonna look like for the full year. You were kind of highlighting that you were expecting it to climb over the following quarters when you set the guidance, but we've only had one quarter. It was just more a question of what didn't materialize versus, you know, what's actually happened. But can I also add one other question? The closure of the EuroChem project in Russia. Did it have much of an impact on the CFFO in the third quarter?
Let me take this one on Kingisepp II , and then we go back to the view on contract assets. The termination of Kingisepp II, as you are rightly reminding us, has been closed on August eighth. The overall impact in terms of financials, if this is what you're asking, is with a positive sign, in the sense that, from the pure accounting perspective, we are balanced in terms of, you know, assets. One thing that needs to be reminded is that the client tried to call our bonds. This is known to the financial community. Clearly, these bonds were not frozen just because banks are not allowed to make any payments to a sanctioned subject. In a way, the financial situation with Kingisepp II is balanced and will bring on discussion with the client and negotiating going forward.
As for the question relating to the contract assets, let me say that everything is in line with the contractual framework that we have agreed with the various clients. There are no particular events. Simply, of course, what was ongoing in the past has been transferred into, let me say, receivable cash. Now we have the new work which is going to be delivered to the client, which I repeat, if it has not reached the contractual milestone, it is not possible to build it. There are no particular phenomenon behind, there are no, let me say, pathological factors. It is simply linked to the contractual structure that we have in place and the type of work that we are executing on behalf of our client.
Nothing particular behind the value of this amount, which by the way, of course, we are trying, and I believe that we have all the way to try to reduce this amount within the end of the year. Since, you know, in particular, in the last quarter, there are different type of efforts in trying to convince the client that we have achieved the value by the various milestones. I am expecting that within year-end, the amount of the contract assets that we have experienced by the end of September could be reduced within the year-end.
That's very clear. Thank you.
The next question is from Mick Pickup with Barclays. Please go ahead.
Good afternoon, gents. It's Mick here. Just looking ahead, Sandro, you obviously talked about 2023 being a year of growth from here. I think if I'm right in your calculations, you're saying that you're gonna end up with a backlog at least at EUR 8.4 billion. To my type of math, I would say you're probably best part of late threes in hand already. Can you give us some guidance on what you're already in hand for next year? I'm just looking at lower end of consensus, which shows very little growth in next year. It's looking at the moment that your run rate's hitting EUR 900 and should be going a bit north of that per quarter.
Well, you are right, Mick. We are enjoying a very high level of backlog, even after having taken out the Russian project, we have remained at an amount which is well in excess of EUR 8 billion. A significant portion of this backlog is due to be realized, in particular, in 2023 and the year after, of course. On top of that, as we have already stated, we are more than confident, let me say almost assured, that very soon other significant orders will be awarded, leading to a total orders awarded in the 12 months ended December 2022, even in excess of the turnover that we expected to deliver for the entire year.
It means that by the end of 2022, based, let me say, on our expectation, but let me say that are more than expectation, our final backlog will be higher than the backlog that we have, we have enjoyed by the end of September. As you have correctly stated, 2023 is already backed by orders that are already on board. Now we have a quite good visibility of what we have to do in 2023 and even in the year after. You know, in terms of economics, let me say that we are used, of course, and you know very well, that we are used to provide financial details as far as the 2023 is concerned, when we deliver the year-end accounts.
What I can anticipate is that even in 2023, thanks to the already existing backlog and the new awards that we expected to achieve within year-end in the traditional space, traditional business space, as well as the orders, the business, the contract that we expect to transform into production in 2023 as generated by the green business, the energy transition business, it is useless to say that the growth that we are foreseeing for the next year will remain in the double-digit space. This is what I can anticipate confirming the visibility that we have, but I prefer before providing additional details as far as the, let me say, the margins are concerned and all the other financial elements that we are used to provide, when we deliver the year-end results.
Okay. Can I just ask you about that? Obviously, you're pretty confident on winning the awards, and you talk about the traditional market. I know I can see a refinery somewhere in the Middle East region that you're well placed on. What is it that's driving that shorter term backlog expectations? Is it that Middle East downstream, or are we starting to see the first of the fertilizers projects coming through yet, given pricing dislocations in gas?
Absolutely no. Absolutely, we are not seeing any reduction in any level of business and in any business space, Mick. Nor in the traditional, I'm saying, as you have correctly stated, refining, petrochemical, fertilizer, all of them are expressing a lot of opportunities. As you have seen our commercial pipeline, which have grown more than EUR 5 billion this year, is almost entirely covered by this type of projects. All over the world. For example, in the refining business space, a lot of refining units must be updated, how to say, revamped, in order to be able to produce type of fuels which are more aligned with the prevailing international rules. Euro 5 diesel with a low level of emissions and something like that.
In particular, in the West Africa, North Africa, West, East Europe, there are a lot of units which must be revamped. As you know, one of them is one of the projects that we are presently executing in Nigeria, which represent one of the most remarkable project that we are doing so far. At the same time, let me say that on top of the project in the traditional space, a lot of clients, regardless the regions, regardless the geographies, they are accompanying projects, investments in the traditional type of projects with, let me say, new solutions in order to achieve the decarbonization path. In many situations, we have been requested by potential clients, potential because of course we are talking about offers that we have already submitted to those entities.
Submitting proposals to, for example, to decarbonize their industrial infrastructure with the CO₂ capture. The CO₂, which has been sequestered, not simply utilized, not simply injected into an exhausted well, but to be utilized as a raw material for another industrial process. It means that what we are seeing and what right now prevails in the market are requests for investments, requests for projects, whereby almost every time the client requests an efficient solution for a traditional type of plant, but more or less always accompanied by the submittals of a technological solution in order to reduce the emission of the CO₂. To introduce a new industrial process which leverage on, for example, renewable energy sources, or similar type of products.
It means that, the energy transition process is something which more or less, in a very short period of time, will affect all our business. It's not a matter of maintaining a complete indifference between traditional process projects and the green projects. Almost all of them will represent an integration between technological solution for, let me say, traditional products, but almost always, I repeat, accompanied by technological solution in the green space. This is what we have in front. Of course, we are extremely well equipped because our technological portfolio can, deliver solution in both space, but in particular thanks to the investments and the effort that we have dedicated in enhancing our green portfolio over the last, couple of years, three, four, five years. Now we are ready to cope with the market request with the most efficient and state-of-the-art solution in the green space.
This is what we have in front of us, and for this reason we are extremely positive about our future.
Thank you.
The next question is from Kevin Roger with Kepler Cheuvreux. Please go ahead.
Yes, good evening. Questions have been already asked, I have just an additional one for you, please. Related to the Forex impact that you see on the balance sheet and the weight on the net cash position, do you have any view where basically you would see the Forex turning back into the cash flow? Would you say it's probably for Q4 or more for next year? Is there any idea in terms of timing on that subject, please?
Yeah, sure. Well, first of all, we're talking of mostly sale of dollars going forward due to the nature of our business. I would say that it's relatively shorter than it used to be, with roughly 30% by the end of 2022, 60% in the first half of 2023, and the last portion in the second half of next year till the beginning of 2024.
Okay, very clear. Just to be sure that I well understand, it means that on the paper you should have a positive cash contribution from those Forex effects of something like EUR 40 million to EUR 50 million in Q4.
It's going to be roughly EUR 30 million-EUR 40 million by the end.
Kevin, if you allow me, first of all, it is quite difficult to identify how much and when there will take place the reversal. For sure, if we assume that the present, the prevailing exchange rate will remain the same all over the residual period, whereby the underlying transaction which has been covered, hedged with the hedging contract will materialize. You know, who knows what will be the prevailing exchange rate when the client will pay the invoices and I will cash the money. Unfortunately, we have to prepare our accounts based on the international standards which imply, of course, oblige to evaluate our hedging contract and with the mark-to-market criteria when we close the numbers at each quarter.
Is, like you say, a simple exercise because what we are now reflecting in our net financial position will be covered by a similar flow of money when the underlying transaction will take place. You have to consider that this amount is close to zero from a substantial point of view. It's simply a pure accounting issue, because from a pure financial standpoint, the effect is close to zero. What we have now considered the net financial position as lowering the net cash, which has lowered the net cash, will be covered by a higher cash flow as soon as the money will be recognized by the client.
As already stated by Fabio, if we consider that there will be no movement in the exchange rate, euro/dollar, half of this amount will be recovered with the first half of 2023, and the remaining portion, more or less, in the following months.
Clearly this picture should change should we get additional contracts which should require additional coverage. In a way we're closing off the existing stock. Again, the purpose of any hedging policy is to cover from risk and increase the contract's margins at the day of inception. Irrespective of what the market or how the market performs, we have done our duty, and that number is always going to be netted by the actual flows when they happen. This is a quite important point to bear in mind.
Okay, thanks a lot.
The next question is from Massimo Bonisoli with Equita. Please go ahead.
Good evening, Alessandro and Fabio. Two clarifications from me and one question. Sorry to ask it again, but if I got it correctly, you mentioned that you expect book-to-bill of at least 1x in 2022. If my calculations are correct, in fourth quarter you expect at least an order intake of EUR 1.8 billion, out of which you already announced in October 0.5 billion from the two projects already announced. Is that correct? The second clarification, I did not catch, sorry, but regarding your statements on volumes regarding 2023. You were mentioning a double-digit growth in volumes there. If you can help me there, that would be good.
You have well understood both of them. Let me say, as far as the first clarification is concerned, let me reconfirm once again that in particular in the fourth quarter, considering that EUR 400 million has been already awarded so far, and I'm referring to the contract in Algeria. On top of that, we are extremely close to the finalization of another contract, very important contract, which will contribute to achieve, and let me say, I am confident that if we will be able even to move on top of the ratio one compared to the revenues. You are completely right. In the fourth quarter we expect to get new orders well in excess of the amount that you have mentioned. Well in excess, let me say. First.
Second, it was with reference to the 2023 expectations. I have stated that even if we prefer, of course, to provide the details as far as the financial expectations are concerned, when we will deliver the year-end accounts, the year-end results, which means middle of February, end of February 2023. Thanks to the backlog that we have already on board, and what we expect to get in the fourth quarter, all these orders must be transferred into production already in 2023. This provides us the confidence that in 2023, volumes of activity will be higher than 2022, with a double-digit rise.
Very clear, Alessandro. Just, the question is regarding your hydrogen project in Rome, in Lazio. Could you elaborate more on the return profile of the project for your clients once they decide to invest, considering, let's say, the contribution you will receive from the European Union? What's the time horizon to get to breakeven for that project, more or less?
I start to provide you with some information, and then for additional detail, I leave the floor to Fabio. First of all, of course, we are talking about a project which is first of a kind, and as usual happening in such circumstances, it is necessary to act as a promoter. NextChem, which is the promoter of this project, has played this role efficiently, let me say, because has been able to propose a very, very efficient solution. The European institution has analyzed in a very in-depth way our proposal, and finally has resolved that out of the EUR 500 million dedicated to Italy, EUR 200 million should be dedicated to our own proposal, so which means that this is the starting point of the project.
As I stated before, it is a project whereby NextChem plays the role of the promoter. Of course, we don't want to remain producers. It's not, of course, our role. We are a technologist. We are, of course, a technology driven contractor and technologist, but we are not producers. As we already did in the recent past, when there are projects capable to deliver a very attractive return, and in order to make them happen, it is necessary to invest money, of course, we are ready to do it.
Of course, our role in this project has been promoter at the beginning, and then while the project will be executed with the benefit of the IPCEI grant, in the meantime, we will define, with other investors, strategic partners, industrial partners, financial institutions, we discuss with them because we have already received a lot of demonstration of interest from many of these entities that they are willing to participate to the equity of this project. At the end, but in the short term, the role of NextChem/Maire Tecnimont will be of the minority investor. We will decide willing to retain a minority stake or not.
Possibly, yes, because the project, based on our analysis and our projections, the project is due to deliver a very interesting high return, and for this reason, we could retain a minority stake in the legal vehicle which will realize the project. It will be an opportunity, not necessarily, but since the project is extremely positive, we will evaluate in the meanwhile. What is important is that I can confirm to you that we have received tens of demonstrations of interest to be with us in, with this project. I don't know, Fabio, if you want to add something else.
I think you said it all. From a point of view of the interest of the market, we received calls even from China to understand how they could contribute. In general, the timetable in front of us right now is that we will have approximately 12 months of engineering works, the very good part of which will be financed by the same grant. We have the luxury to define, as developers, the best structure for this project, which means, first of all, find the right feedstock provider, which is essential in this type of project. When you talk about waste, feedstock providers are probably the most important pillar upon which to build. In terms of offtake providers, we have full flexibility. These plants are modular. They can produce ethanol, methanol, hydrogen, depending on the market demand. We will see.
When the plants will be up and running, what will be the feedstock strategy most appropriate to the current market conditions. We know that methanol is already there. Demand for methanol is already there. Ethylene can be mixed with current fuels even now, and hydrogen is always something we can shift to when the hydrogen economy will be ready to receive it. In a way, we are, I think, in the best, in the most favorable conditions to deliver a landmark project for a region and a city that I am from there, deserves it. Let me say, let me put it this way.
Very clear. Thank you very much.
The next question is from Emanuele Negri with Mediobanca. Please go ahead.
Yes, good evening, everyone, and thanks for taking my question. Just a quick two questions. The first one is about your profitability. Do you think that the declining margin in the petrochemical market of petrochemical producers may somehow affect negatively your ability to pass through increased costs to customers? And the second one is just a quick follow-up on the previous question regarding the EuroChem cash, which is being disputed. I know you cannot give many updates, but can you just give some flavor if there was any impact in the cash flow in the second or in the third quarter from the EuroChem cash? Thank you.
I don't know, frankly speaking, why you are so convinced that the petrochemical business is due to deliver lower margin. Really, I am, let me say, almost astonished, because everybody knows, let me underline, everybody knows that the huge request of projects in this market, of course, is a clear sign that there are no decline at all in the demand, first of all, of the commodity, which is, of course, the real origin of those investment, which of course is sustaining a wave of investment in the petrochemical business, which is absolutely huge. Huge, let me say, is something which is reducing the size of these, of the investment. Everybody.
Everywhere, in particular in the Middle East, in particular in the U.S., all those countries which has a spare capacity of gas production on top of the production, which is due to satisfy energy consumption, and there are a lot of gas production in excess of the requirements for energy, all of them are investing money in downstream, in the transformation of gas into the commodities. First of all, fertilizers, secondly, polyethylene, polypropylene, the traditional commodities of the petrochemical business. All of them are delivering. It's a volatile market, for sure. But even in the volatile market, the price of the commodities on average have remained at a very high level, which those all the clients never experienced in their life.
For sure, of course, in this market environment, the spending for this type of plants remains very high. The attitude of the client, in recognizing, let me say, proper contractual conditions to the various contractors is quite positive. Not easy, for sure, but remains positive. Even comprising in this positive attitude, also the availability to recognize the cost increase. All of them are accepting, at least as far as our own experience is concerned, they are accepting contractual conditions which makes possible to have recognized by the client the cost escalation, to the extent the escalation is in excess of the normal threshold which the contractor has to manage it itself.
To the extent the cost increase exceeds the normal threshold, which is in the region of 3%-5%, then we have the possibility, contractually speaking, to sit with them and having recognized the cost increase. This event doesn't affect the margins. The competition whereby there is a downstream project which implies having the technology behind is quite limited, and most of the competitors are based in the Western part of the world, considering that the cost structure of the various contractors are similar to the cost structure of my own group. It means that it's a very same competition. There are no Chinese, there are no Koreans, with all the respect that I have for them. When there is a downstream project, only Western-based contractors have to play because they retain the technology.
For this reason, margins which are delivered by, in particular, petrochemical projects, they do not, let me say, deliver any downsizing compared to what we have experienced over the last four, five years. On Kingisepp II, let me rephrase better what I probably said in an unclear way before. On this project, we are using the termination for force majeure. I think this is the same question which was raised at the beginning.
No, yeah, I was wondering if there was some aspects in Q3 in the cash flow.
Excuse me, can you repeat the question?
Yeah. Did you have any impact from this situation in Q3 in the cash flow?
No, no impact in Q3.
Okay. Okay, thank you so much.