Good afternoon. This is the conference operator. Welcome, and thank you for joining the Technip Energies first nine-month 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and one on your telephone keypad. 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. Philip Lindsay, VP and Head of Investor Relations of Technip Energies. Please go ahead, sir.
Thank you, Judith. Hello, and welcome to Technip Energies' financial results for the first nine months of 2024. On the call today, our CEO, Arnaud Pieton, will provide an overview of our nine-month performance and business highlights. This will be followed by CFO Bruno Vibert, who will share more details on our financial results. Then Arnaud will come back to conclude. We'll then open for questions. Before we start, I would encourage you to take note of the forward-looking statements on slide two. I will now pass the call over to Arnaud.
Thank you, Phil, and welcome everyone to our results presentation for the first nine months of 2024, through which we have made tremendous progress in executing our business plan. Let me take you through some of the key highlights of our performance. We delivered robust revenue growth of 13% year-on-year, a testament to our backlog evolution, strategic initiatives, and market positioning. Volumes were notably strong in project delivery as large projects ramp up, whereas TPS revenues are running at an annualized rate of around EUR 2 billion. As a result, we are upgrading our 2024 revenue guidance by 5% at the midpoint to a new range of EUR 6.5-EUR 6.8 billion. This new range implies that full-year revenues will grow at a double-digit rate in 2024, and with a momentum expected to continue in 2025.
EPS grew by 35%, benefiting from strength in revenues, higher financial income, as well as the absence of material weather factors that impacted last year. Commercially, we secured our position on notable projects that enabled diversification and will serve to populate our backlog in 2025 and beyond. This includes our selection for a major LNG export terminal in the U.S., an important blue hydrogen FEED in the U.K., and a green ammonia award for our Rely Joint Venture. I will provide more color on these later. Finally, with the completion of our share buyback program and planned cancellation of treasury shares, TEN will have returned more than EUR 170 million in cash to shareholders during 2024 through dividends and buybacks equivalent to roughly 4.5% of our market cap and underlining our commitment to shareholder returns.
Moving to operational highlights for the third quarter, where we continue to execute well across our portfolio of projects and TPS, as evidenced by our solid EBIT margins. In Qatar, both LNG projects, NFE, and NFS are progressing per plan. Notably, NFE has progressed towards peak mobilization with close to 45,000 workers at site. This activity will plateau at this high level through 2025. In ethylene, a market where we enjoy clear leadership, we passed final performance acceptance test at Long Son in Vietnam, a project which integrates many of our proprietary licensed ethylene technologies. Turning to TPS highlights, Reju, our textile-to-textile recycling company, opened its first commercial scale demonstration plant in Frankfurt, Germany. We completed the FEED for the Arcadia eFuels project to utilize CO2 to produce sustainable aviation fuel, and the LaBarge carbon capture project in the US continues to make good progress.
These three themes, carbon capture, sustainable aviation fuel, and plastic circularity through Reju, will feature as breakout sessions for in-person attendees at our upcoming Capital Markets Day. Overall, I am very pleased with our solid first nine months, and I am sincerely grateful to our teams for their continued dedication and professionalism. Turning to commercial and other strategic highlights. With a book-to-bill of around one, our order intake year-to-date is tracking in line with our revenue. On a full-year basis, we are very confident that orders will exceed revenue, notably due to awards likely to be booked in Q4, including one for the delivery of large modules for a major offshore project in the Americas. We also recently secured an important award for our green hydrogen and power-to-X venture, Rely, to provide services for one of the world's largest green ammonia plants for AM Green in India.
In the third quarter, specifically, we celebrated the technology first with an award for our proprietary low-emission cracking ethylene furnace for CPChem in the U.S. This award showcases our ability to develop, scale, and commercialize technologies that assist in the decarbonization of hard-to-abate sectors. In addition, we secured our position on notable projects that enable diversification and will serve to populate our backlog in 2025 and beyond. This includes our selection by Lake Charles LNG for a major export terminal, as well as a front-end engineering design, or FEED, award for Rovuma LNG in Mozambique. Both highlight our continued leadership in modularized LNG trains. In addition, BP awarded TEN a FEED for its H2Teesside project, which is expected to be one of the U.K.'s largest low-carbon hydrogen production facilities, fully integrated with the carbon capture technology.
This reinforces our position in the UK's first decarbonized industrials cluster, where we have also been selected for the Net Zero Teesside Power carbon capture project, pending final investment decision. Our strategic focus and competitive edge in these areas really position us well for future successes and sustained growth. Finally, as part of our strategy to enhance workforce capabilities, this week, we announced a small bolt-on acquisition of process engineering businesses in Italy. Bringing a talent pool of 70 people, the deal strengthens our early engagement and TPS activities across core and energy transition markets. I will now hand over to Bruno to present the financial highlights.
Thanks, Arnaud, and good afternoon, everyone. I'll begin with the highlights of our financial performance for the first nine months of the year. Revenues were 13% higher year-over-year at EUR 5 billion, benefiting from the ramp-up of major projects, as well as a steady growth in TPS, which delivered its highest-ever quarterly revenue performance in Q3. With stable margins, recurring EBIT increased by 12% year-over-year to EUR 357 million. Net profit is very strong, up 35% year-over-year to EUR 280 million, benefiting from the operational performance, growth in net financial income, and the absence of weather factors that impacted 2023. Turning to orders, adjusted order intake was EUR 4.8 billion in the first nine months, broadly keeping track with revenues. As Arnaud mentioned earlier, our book-to-build ratio is set to exceed one on a full-year basis.
Free cash flow, excluding working capital and provision, was solid at EUR 360 million, and closing gross cash was EUR 3.5 billion, essentially in line with the year-end position. So, in summary, we've delivered a strong performance across key metrics for the first nine months of 2024. Turning to our segment reporting, starting with Project Delivery. Revenues are up significantly, with growth of 17% year-over-year to EUR 3.5 billion, as activity ramps up on the major NFS project in Qatar, while on-site construction activity on NFE is plateauing at peak levels, with good progress being made. Turning to profitability, where this quarter, for the first time, we're disclosing segment recurring EBITDAs in order to provide the financial community with more granularity of our business performance and enable better comparisons in the market. For Project Delivery, EBITDA margins for the first nine months are around 100 basis points above EBIT margins.
This is a sensible proxy to consider for modeling moving forward. Assessing the performance year-to-date, EBITDA margins were 50 basis points lower year-over-year at 8.3%. Execution across the portfolio is consistently strong, with the differentiation versus last year explained by portfolio rebalancing and higher volumes from earlier phase projects where less margin is recognized. Benefiting from the revenue growth, EBITDA in absolute terms increased double-digit year-over-year. The trends for recurring EBIT are absolutely consistent with EBITDA. Finally, the backlog has grown by 2% since the beginning of the year to EUR 14.2 billion, equivalent to 3.5 times 2023 segment revenues, and providing excellent visibility. Given the strength of our commercial outlook for the next 12-18 months, we are confident that we will reinforce this backlog with high-quality projects, and this supports TEN's very positive trajectory. Turning to TPS, where business momentum remains strong.
TPS delivered solid financials, with revenues up 3% year-over-year, resulting from growth in renewable fuels, decarbonization services, and PMC activities. Proprietary equipment volumes, notably for Ethylene projects, were broadly sustained at high level. Adjusted EBIT increased by 1%, mainly driven by this stronger activity. For the third quarter, adjusted EBIT margin was up 30 basis points versus the first half of the year, bringing the year-to-date EBIT margin to 9.4%. Year-over-year, TPS EBIT margin reduced by 30 basis points, owing to the same trends highlighted in Q2, while segment gross margin improved year-over-year by close to 100 basis points. This was offset by investment for the long-term growth of TPS through strategic initiatives, increased LNG, and higher selling and tendering activity.
Adjusted recurring EBITDA margins increased year-over-year by 20 basis points to 12.8%, as this metric is not impacted by the amortization of our investment in labs and pilots, as well as the greater mix of services with the associated diversification impact. Overall, this drove a 5% year-over-year growth in EBITDA to EUR 188 million. Finally, TPS backlog closed the period at EUR 1.7 billion, down 7% year-to-date, owing to the absence of any material awards during Q3 and the relatively light book-to-build. Business prospects for TPS remain positive, and the level of engagement is very robust. Accordingly, we are confident that the trends will improve in the coming quarters. Also, as a reminder, TPS backlog excludes a large proportion of the project management consultancy and long-term service agreements and is therefore understated by a few hundred million EUR.
Turning to our other key metrics and beginning with the income statement, we continue to maintain a robust discipline on corporate costs, which at EUR 41 million are trending below the run rate for 2023 that was somewhat impacted by strategic projects and the employee share offering. While not on the slide, I want to address non-recurring expense of EUR 16 million, which increased in the third quarter. Beyond our two operating segments and corporate, we've identified separately for transparency purposes some costs associated to development projects. These investments, notably for Reju, are accordingly no longer allocated to the operating segment to provide you with better visibility. We will discuss more about our investments during the CMD. The net financial income line is very strong and nearly 50% higher year-over-year, driven by higher global interest rates.
Even if we are past the peak for global interest rates for now, we expect net financial income to exceed EUR 100 million for the full year. Lastly, on the P&L, at 30.3%, the effective tax rate is impacted by a change in earnings mix, with reduced earnings contribution from lower-rate tax jurisdiction and more earnings derived in higher tax rate jurisdictions. Turning to balance sheets, where cash of EUR 3.5 billion is significantly in excess of the net contract liability of EUR 2.8 billion. At our capital markets day on November 21st, we intend to provide more granularity on our balance sheet. Turning to cash flows, where the picture is largely consistent with prior trends.
Free cash flow, excluding working capital, was EUR 360 million and consistently strong, supported by cash conversion from EBIT above 100%. This demonstrates continued strength in our operational execution and the tailwind of the net financial income.
Capital expenditure at EUR 56 million is materially higher year-over-year due to investment in the Reju demonstration plant and the lease recognition of our new offices in Houston, which will contribute significantly to our Scope 1 and 2 emission reduction targets. As expected, the working capital trend improved from the first half position, benefiting from initial payments from major awards in the third quarter. The trend in the fourth quarter on working capital is again expected to be neutral to slightly positive. Lastly, on shareholder returns, beyond the dividends we paid in the second quarter, we've now completed our EUR 100 million share buyback program. As indicated previously, we intend to cancel up to 70% of the shares acquired as part of this program, and when combined, TEN will have returned more than EUR 170 million in cash to shareholders during 2024 through dividends and buyback.
We end the period with EUR 3.5 billion of cash and cash equivalents. Before passing back to Arnaud, let's revisit 2024 guidance. We are upgrading full-year revenue guidance from EUR 6.1-EUR 6.6 billion previously to a new range of EUR 6.5-EUR 6.8 billion. This upgraded guidance implies a 7% uplift to the lower end of the range and a 5% increase at the middle of the range, and is underpinned by the strength of our revenue profile through the first nine months plus the backlog we have scheduled for the fourth quarter. We are also confirming our margin guidance in the range of 7%-7.5%, which, as our year-to-date performance indicates, is very much trending towards the middle of this range.
As I discussed previously, owing to earnings mix and the likely impact of the French surtax , we increase our tax rate guidance to a new range of 29%-33% for full year 2024 versus 26%-30% previously. Clearly, at this point, the surtax has not been enacted into French law. Therefore, in a scenario where the surtax is not introduced, we would expect to be at the bottom of the range or below the 30%. Regardless, this does not impact our ability to comfortably increase EPS well into double digits. I'll now turn the call back to Arnaud for concluding remarks.
Thank you, Bruno. So, to conclude, we delivered a strong first nine-month performance, and we are raising full-year revenue guidance while delivering to our margin guidance. Supported by a year-to-date book-to-build of one and our confidence in the award outlook for Q4, we expect orders to exceed revenues for the second consecutive year. Beyond Q4, we are well-positioned for notable prospects that will reinforce our backlog while supporting diversification by markets and geographies. So, finally, we are, and I am, very excited to deliver our Capital Markets Day on November 21st in London, during which we will update you on our strategy and financial objectives for 2025 through to the medium term. We will offer some new insights into our growth plans, investment priorities, and initiatives to enhance shareholder value. We do look forward to engaging with our investor community and sharing more about our vision for TEN's bright future.
With that, let's now open the line for questions.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on a touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up your receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Victoria McCulloch, RBC. Please go ahead.
Good morning. Thanks very much for your time. A couple of questions from me this morning. So, with the expected LNG supply glut appearing to come from 2028, what's your current view on the volume of unsanctioned projects? And maybe more interesting, what are your customers telling you in terms of the current timelines you expect these to go forward, or do you see the risk of potential delays in some of these? And secondly, on TPS, apologies if I missed this, it sounds like you said it was the highest quarterly revenue in three Qs. Should we expect to see that continuing into Q4? And we saw, obviously, a good margin recovery on a quarterly basis from one quarter to the next.
Is this back on trend to the double-digit level, so to speak, that you're aiming for in 2025 versus the last quarter, or is there a risk of seeing some additional investments coming in there? Thanks very much.
Thank you, Victoria. So, I'll start with your first question on LNG and LNG supply. So, our 2030 view for the LNG market is that the world will need 800 million tonnes per annum or so of LNG supply by 2030. As you probably know, there's about 500 million tonnes currently being produced, million tonnes per annum. So, that's the existing capacity. You have a further 200 MTPA under construction, and we are building a very large chunk of that. About 40% of that is under construction with Technip Energies. And therefore, it's leaving a gap of about 100 million tonnes per annum that is needed to bridge from the current five, the two under construction, and what we expect being the 800 million tonnes needed by the world by then.
So, you know, the LNG market and our customers, they speak much better than I do about the LNG market, but a very good way to describe the LNG market is, in a sense, it's a market that is supply-led and not so much demand-led. So, you may see an excess of LNG around 2027, 2028, and this could drive some of the LNG price or cost down, and therefore, it will attract more customers and more demand. And if you look back at the previous cycle, it always, I mean, those are, I mean, they have the same, similar, very similar attributes in the sense that you have actually excess supply, which calls for actually or attracts more demand, and therefore, the supply-to-demand gap is being filled, and thereafter, it triggers another wave of investment for more supply and so on and so forth.
So, I think we are in a third or fourth cycle of this kind, and therefore, we are, based on what our customers and what we're hearing from our customers, there's no anxiety on our side. We're quite optimistic about the LNG pipeline. We have quite a few prospects and feeds that are ongoing. We've been selected for Lake Charles. We're now beyond feed stage. We have been selected for a feed in Rovuma in Mozambique by Exxon. I mean, the pipeline continues to be rich in LNG for us going forward. So, no anxiety, and I would say a lot of optimism from my end because I think the future is about renewable and gas, natural gas, and therefore, LNG as part of being natural gas. It's to have enough dispatchable electricity and power for the world.
Renewable alone is not satisfactory, so you need the combination of renewable and gas to make this power dispatchable. So, we're very optimistic about the outlook for gas at Technip Energies, and that's very much in line with what we're sensing from our customers who now have 20, 30, 40 years of experience into the LNG market, and that's why they continue to announce projects, and they're looking at the world 2040, 2045, and are a bit less concerned by the immediate price of commodity in 2024. So, it's a long-term game, and therefore, we are very optimistic and positive about it. About TPS, well, I mean, I would say that we are almost a year ahead when we have a quarter that is closing at a run rate that would exceed the EUR 2 billion revenue.
That's the target we had provided for 2025, so we are very near this target already in 2024. The momentum will continue, and we'll tell you more about that, I mean, during our Capital Markets Day, but our outlook and our objective doesn't change. TPS at or above 2 billion for 2025 at a double-digit margin. That continues to be our objective, and it will be confirmed during our Capital Markets Day.
Super. Thanks very much for the call. I appreciate it.
The next question is from Guilherme Levy with Morgan Stanley. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. I have two, if I may. The first one, could you share some comments with us in terms of engineer remuneration inflation rates? I know that, of course, the company can change the contract mix, so not necessarily fuel the inflation in terms of margins, but if you could perhaps share some more in terms of what you're seeing on a country-by-country basis. And then the second one, I know that we don't get the full financial statements in this quarter. We just get them on a half-year basis. But on your provisions balance, could you say a few words on the contingencies related to finalized contracts? That line in the beginning of the year was at EUR 170, and that declined to EUR 90 in the first half.
If you could share there on what happened in terms of that balance in the third quarter, that would be great. Thank you.
Thank you, Guy. I know Bruno is burning to take your second question, so I'll ask him. I mean, he's going to take it first, and then I'll answer your first one.
Sure. Good afternoon, Guy. Delighted that our half-year results are well received, so there is a request for more even quarter-to-quarter. So, right now, the trend on the, as always, it's a portfolio that matters. And from one quarter to the next, you can have different parts of the portfolio that are performing differently. To go back to specifically your question, the impact of if you had the same pro forma disclosure Q3 versus Q2, you would see a much less meaningful variation on this line versus Q2. So, almost no or very small change versus Q2. So, it was really from the rest of the portfolio that was the drivers.
On inflation and the impact on the business, so, as you know, because you know as well and you're following us, in our projects cost base, we account for inflation. So, being for hourly rates, equipment cost, etc., when we are facing projects that are going to last for three to up to eight years for some of them, we take no chances. We bake into our price and in the cost base of our projects a percentage dedicated to inflation on a yearly basis. So, it could be 3%-4% per year. If the inflation is above what is included in our cost base, well, we may have a little bit of an exposure, but we're only talking about the gap between what is baked into our cost base and the actual inflation rate.
If the inflation rate is a bit lower, then we have an upside. If it's not an upside, but on the contrary, an exposure, we have also contingencies and technical contingencies to cover for that. As you know, as a, I mean, we are extremely cautious in our execution in the sense that we do not speculate. On cost of equipment, material, bulk, copper, cables, and the rest, we have a very high coverage on our, I would say, tenders and prospects when we submit a price to our customers. I would say 80%-85% of our cost base is backed by firm offers with the validity that is necessary for us to be protected, which means that when a contract is awarded, and I will repeat what I've repeated several times, we do not speculate on when to place the order.
If we have a firm price, we go place the PO, and we secure our execution. We don't speculate hoping for better prices later on or God knows what. We're not in the business of speculating. We're in the business of delivering projects, and our practice, our disciplined approach protects us from, I would say, the artifacts that you will see, inflation and whatnot. And this is how the portfolio continues to give and continues to deliver the results that we are delivering quarter after quarter. The attribute of the project delivery business within Technip Energies is one that is, I would say, providing a very solid baseload to the company with a very strong cash generation. And what is important is that the portfolio continues to give and that we manage this portfolio in a way that it is predictable and delivers results to you and our shareholders.
So, no speculation, a very, I would say, good level of protection. When we cannot get the right protection, as you know, we go open book, and therefore, we pay the actual price, full reimbursable or open book. None of our projects are truly fully lump sums. As you know, it's a blend, the importance being the level of protections and the predictability we can deliver.
Thank you.
The next question is from Kate O'Sullivan, Citi. Please go ahead.
Hello. Thanks for taking my questions. First, on TPS, strong results this quarter, but we did see slowing order intake. So, just based on the pipeline you have and the discussions you're having with customers, could you provide some color on any areas you have noticed a slowdown or indeed an acceleration? And second question on the accounts, you had a step up in non-recurring expenses this quarter attributed to the setup of new business ventures. I think you mentioned Reju costs are allocated here. Which other businesses will you allocate under this line, and how do you expect these to trend over the coming quarters? Thank you very much.
Yeah. Hi, Kate. So, yeah, TPS, a bit of a soft order intake for the quarter, and you've noticed a backlog that is a bit lower than what it has been in the past quarters, but very strong momentum, and we have actually a very good line of sight for Q4 for potential, I mean, likely awards that will be dominated by, I would say, products and technology, and therefore, really accredited and a bit less services, therefore, a bit less man-hour based, so we've had a wave of quarters, I mean, two, three quarters that were marked by more services awards and less product or proprietary product awards. In Q4, this could be reversed. We have, in the domain of carbon capture, for example, some very good leads.
We expect the portfolio to, again, be tainted a little bit more by more products and technology and a bit less services. It doesn't mean that services would slow down in absolute term, but in relative term, it would be more T and P and a bit less services, again, on a percentage basis. Where is it? We see a very strong momentum in, I would say, the blue chain. Blue ammonia, blue hydrogen, and carbon capture. There's really a very strong momentum at the moment. Maybe a bit of a slowdown in what might be energy derivatives that are more or less needed at a time where there is a bit of a slowdown on the macro environment, but all in all, the portfolio continues to deliver.
The positioning that, I mean, the position that we've taken in the new markets in particular is really generating a lot of demand. There's need for more energy. There's also a need for less emissions, and we have been asked to contribute and to do a lot of studies related to decarbonization and reduction of emissions. So, all in all, I mean, momentum continues to be strong. Q4, you should see a recovery in the backlog because it will be populated or colored by more products and technology. And when you say more products, all of a sudden, you have more volume per order, okay, because when we sell a proprietary product, the orders are in the several tens of millions or in the hundreds of millions per order, and therefore, you bring immediately more volume and also a more longer cycle aspect to the order within TPS.
So, we're feeling pretty good about it. It's just a matter of time, and Q4 should be providing the evidence of what I'm describing here. Your second question was maybe Bruno will take it.
Yes. Good afternoon, Kate. So, on non-recurring, which was indeed a bit of a step up versus the previous quarters, not the full amount was associated to Reju orders, but let's say a high single digit for mainly Reju and then other initiatives for other markets, but that are not as mature. So, maybe a bit too early to name them out. At the CMD, we will provide beyond 2024 what can that look like. We are very excited, for instance, about Reju. Recently, they announced that they had concluded with Waste Management and Goodwill in the U.S., some agreements that can be at the source for feedstock, which is the base for PET recycling, as you know. And all this work and all the team which is gathered to create this ecosystem is beyond TPS, is beyond Project Delivery.
This is why we've decided for transparency purposes to highlight it. It's not corporate, so to highlight it there. The team is picking up pace, doing a lot of work. You could expect something around still a high single digit in terms of expenses, but for beyond that, I think it depends on progress, and that's something we would share more at the CMD.
Thank you very much.
The next question is from Jean-Luc Romain at CIC Market Solutions. Please go ahead.
Good afternoon. My question relates to LNG technologies. ExxonMobil has chosen technology by Chart Industries to develop their Mozambique project. I was wondering if your own SNAP LNG technology was competing for this or not, and what are the prospects for SNAP LNG?
Thank you, Jean-Luc. We've worked alongside Exxon significantly in preparing for the Rovuma FEED, as you may imagine. And so, yeah, our own SNAP LNG solution was put on the table and considered. Now, the size of the LNG train by SNAP LNG is much higher than the individual size of the trains that will be eventually built for Rovuma. So, SNAP is north of 2 MTPA. It's 2-4 million tonnes per annum per train. The trains that Exxon are contemplating as part of Rovuma LNG are below 2 million tonnes per annum. So, not totally, I mean, we played with it, the size of the modules, whether it was suitable for the geography, the site conditions, etc., and the SNAP LNG as designed probably was a bit too large to be accommodated on the specific site for Rovuma. So, and that's fine. We know the Chart technology.
We've integrated it in the past. So, we're very happy to be in this FEED competition. It's a prospect that really fits really squarely within the strength and the sweet spot of Technip Energies. It's all about modularization, so things that we know how to do really, really well, and therefore, very happy to be part of the race. As for SNAP, it continues to be, I would say, a prospect for North America and where all the conversations we are having, as you know, are on the basis of modular trains. And yeah, so we continue to have a couple of prospects in North America, which outcome is, I mean, dependent on the lift of the LNG moratorium in the U.S. But one important point for me about SNAP LNG is whether or not we are having extreme successes or whether we are selling one SNAP every two years.
The important is that the fact that we invested into SNAP and that we designed it, and it was a pre-investment, it's becoming, I would say, an entry point for conversation with customers. So, they're coming to us because we have it. Therefore, it triggers conversations about the various versions of modularized facility that we can design, we can envisage, etc. So, there are byproducts of this investment. For us, it was about a EUR 10 million investment to complete the pre-design of this SNAP LNG. And the byproducts are the things you don't see, which are because we have it, therefore, customers come to us for discussions and whether or not they adopt it in full, but it's not that important because it allows us for a different type of interaction and early engagement.
The fact that we are involved in all the LNG prospects that are modularized, it's also the result of this pre-investment.
Thank you very much.
The next question is from Richard Dawson, Berenberg. Please go ahead.
Hi, good afternoon, and thank you for taking my questions. My first question is on project delivery, where it was a pretty strong quarter based on the top line and with margins sort of delivered above your medium-term framework. And could you speak a bit more about what drove this? And looking forward, as NFE and NFS contributions continue to ramp up, how should we think about PD revenues sort of into next year and particularly on the margin level? And then my second question is on tax. And with an increase in the effective tax rate for this year and the potential surcharge in France, could you provide some details just on your pre-tax income? And specifically, what portion of your profit before tax is actually subject to tax in France?
Presumably, some of the profit is taxed in countries where the projects are actually located and subject to tax treaties, etc. Thank you.
Hey, Richard, so for Project Delivery, you may recall a couple of years ago, of course, we reached a bit of a trough in our Project Delivery top line revenue as a result of pulling out of Russia and pulling out of the Arctic LNG 2 project, which we had to replace in the backlog and therefore replenish the backlog, but also, I would say, start again on a positive momentum in terms of the growth of our revenue, so the good news is that, as I would say, promised and as we indicated, 2024 is showing progression on the revenue when compared to 2023 for Project Delivery, and it's a significant progression of the top line.
We'll share more about that during our capital markets day, but expect to see, and that's what I was trying to convey in my prepared remarks, expect to continue to see some growth in Project Delivery in 2025 in terms of revenue as the portfolio continues to mature. Of course, we will, of course, onboard new projects, but NFE and NFS will be stronger contributors. I'm going to point again to NFS, and we have reached the peak mobilization. I repeat, 45,000 people on site. We will be at this plateau for or throughout 2025. So, there's a significant level of progress that will be achieved in Q4 this year and throughout 2025 on those larger LNG projects in Qatar. After that, in terms of the performance for 2025 on Project Delivery, I would say just join us for the CMD. We'll provide you more granularity.
I think it will be a bit premature for me to give you all that three weeks ahead of our Capital Markets Day. So, I'm sure you'll join us, and you'll have all the answers to your questions. Bruno, maybe on tax?
Yes. Hi, Richard. So, on taxes, as you know, we are not doing a lot of work for projects for France, projects that are infrastructure located in France, but we have a French operating center, which is quite large and has a lot of value. So, for any project, usually, you would have tax, which is borne in country where the infrastructure is, plus where the execution centers are operating, where you have some added value. So, this is why the surplus tax can have an impact on Technip Energies, given there is some tax base in France with the operating center providing high-value services for a lot of different projects. Now, of course, this tax law is not enacted yet, so it's quite speculative at this point. We're following, but as we've revised the guidance, we've included what could be the scenario.
If enacted, it will have a limited impact, still a few basis points of effective tax rate. If it's not enacted, then that's why we would remain in the low range which was provided, which is just below 30 for a full-year basis. To be monitored, it may have a small impact, and the tax guidance, which was slightly updated, but not major.
That's great. Thank you for the coverage.
The next question is from Guillaume Delaby, Bernstein. Please go ahead.
Yes. Good afternoon, Arnaud and Bruno. One question, if I may. Globally, when I look at the title of the presentation, Arnaud, when I'm listening to you, I have the impression that the way you are communicating is changing a little bit, that you may be more optimistic for 2025. So, I know it's too early to provide a guidance or whatever, but if I understand you correctly, you expect some revenue growth in 2025 and probably as well some EBIT growth. That's my first question, and then I will have a related question. So, am I correct? Yes.
Good afternoon, Guillaume. I mean, I'm very upbeat today because it's my birthday, first of all. So, I'm happy to share that with you. Then, yeah, I mean, I think Technip Energies is on a trajectory that is a growth trajectory, so I'm not going to disclose too much because the CMD is just three weeks away. But yeah, I expect to see growth in 2025, top and bottom as a minimum, because there's top line growth. Mechanically, you will have bottom line growth. And also, because the outlook, irrespective of the macro, actually, or the current macro environment, but there are some, I mean, macro trends, long-term trends that continue to support our business and the strategic choices that we've made and where we've placed our bets and our investments. Clearly, it's in areas that are very needed going forward.
It's more molecule, less emissions, a lot of decarbonization while having to continue to supply and provide energy. I'm coming back to what I said a bit earlier, which the winning combination for us and for me, and I'm not the only one, is really a combination of renewable electricity plus gas so as to make the electricity dispatchable. Gas is needed, and as you know, we are heavily invested into gas, and we see, yeah, globally a positive outlook. Some of the choices we are making and investments we've made, and Reju is an example, and we'll talk about Reju during the CMD. It's too early to say, but there's traction, and it's opening new opportunities for Technip Energies in terms of alternative business models and ways of making an earning.
So, all in all, a very positive, I mean, momentum and time for Technip Energies. Our headcount is growing. You'll hear from us during the CMD about that. And yeah, we're not struggling with keeping our people busy.
And maybe a quick follow-up. The big surprise this morning was the margin on project delivery, which I think is somewhat a surprise given the fact that your backlog is still relatively young. I understand from your comments during the call that the current level of operation at NFE is likely to continue in 2025. This probably suggests that NFE is going to be an important building block of your margin in 2025. You can just say correct. So, if it is correct, then there will be room for other people to ask questions.
Yeah. Okay. Bruno is a man of few words than me, so Bruno will answer.
NFE absolutely will be an important block, top line, and of course, bottom line is progressing per plan. In terms of portfolio, as always, when we reach critical milestones like final acceptance, provisional acceptance for some projects, which has happened in Q3, these risks can have an impact. So, we've had some good contribution from some of these projects. The trend for more projects at the early phase, which are dilutive by design, as top line grows within projects, will continue to drive. But the quality of the backlog plus the portfolio, which will evolve, will become a bit more blended. So, the trajectory there, growth of top line, consistency in delivery, will support long-term, let's say, margin and growth in absolute terms, as Arnaud just highlighted.
Thank you very much, and happy birthday, Arnaud. I don't need to worry.
Thank you. The next question is from Sebastian Erskine at Redburn Atlantic. Please go ahead.
Hi there. Good afternoon, and thanks for taking my questions, and obviously, a very robust set of results. Two from me, if I may. The first one, I appreciate some color in your view, the sensitivity of your commercial pipeline to a potential Trump presidency, particularly risks on the Inflation Reduction Act. I'm kind of thinking a little bit about the Exxon Baytown and low carbon hydrogen project where you're doing some of the FEED work on the Section 45 clean hydrogen tax credits. And then secondly, on the order outlook into 4Q, and I know it's been asked a bit before, but just some color on some of the nearer-term projects you might see coming through, an update maybe on Coral North, and then obviously on the Suriname FPSO where you are doing some work alongside SBM Offshore. That would be really appreciated. Thank you.
Hey, Sebastian. All right. So, color on post-elections. All I can say, because I'm not going to speculate, is that there's something that we stated in our prepared remarks, in mind, certainly, about diversification in the portfolio for Q4 2024 and throughout 2025 order intake. The U.S. is a geography where you will see us play. Two years ago, we signed NFS in Qatar. We have today a presence in the Middle East that is significant. And it takes time for a company like Technip Energies to completely, I mean, to properly build some diversification into geographical diversification into the portfolio. So, we have taken the decision together with our board of directors, of course, to rebalance the portfolio.
It's a decision we have taken a year and a half ago, and therefore it's influencing the type of projects and the projects we are chasing and where we are chasing them, so the U.S. is obviously an important territory for that. We have Lake Charles LNG. We are still in the race with another developer in the U.S. Obviously, if Trump wins the election, so we can expect that the moratorium on LNG will be lifted maybe faster than if it's the current administration winning. Now, the current administration winning doesn't mean that the LNG moratorium won't be lifted. Some are of the opinion that it will take a bit longer, but it will be lifted nonetheless.
But if it was to be a Trump victory, so for sure, I believe we will see a faster lift of the moratorium, and therefore it will unlock a pipeline of opportunities, and we don't need 10 of them. For us, one or two is plenty in the U.S., and we have them, you know about them, and we've been selected. And therefore, it could color and come into our backlog and put a large U.S. content into it. In addition to that, and the IRA and the rest, I'm very positive about the blue chain, so blue ammonia, blue hydrogen in the U.S. in particular. You know about our involvement for Exxon in Baytown. We have just been awarded, but we may talk about that during the CMD, a pretty large FEED for another U.S. customer in the U.S., again for the blue molecule at FEED stage, okay?
But I mean, all that, I mean, all those are signs that we're going from pre-FEED to FEED, and that the combination of gas plus carbon capture in a country that is taking a very pragmatic approach to incentives for decarbonized solutions. Yeah, all that makes the U.S. a very credible play for Technip Energies. And happy to report that we are playing. And this comes on top of other things that we will do there, such as pure carbon capture projects, etc. So, clearly, the U.S. and the U.K., because you know about Net Zero Teesside, H2 Teesside, etc., this could contribute to a very, I would say, significant diversification and enrichment of our portfolio in Q4 and also within 2025.
Yeah. Okay. For just the last one on Q4, I think I've listed. I mean, you've listed the prospects. It's just a matter of us being allowed to declare the contract and FIDs being declared by the customers. Coral North, it's very much a question for you and I, but is it on this side of the 31st of December or just on the other side? It won't change much for us. At the end of the day, it will be a project, and we'll be happy to enjoy it. So that's where we're not totally a quarterly business, but we nonetheless expect a very strong inbound in Q4.
Many thanks. Look forward to the CMD. Thank you.
Thank you.
The next question is from Bertrand Hodee, Kepler Cheuvreux. Please go ahead.
Yes. Hello, Arnaud. Hello, Bruno. So, a question related to order intake was EUR 4.8 billion first nine months. Last time we spoke, Arnaud, it was at our autumn conference, and you pointed for a potential EUR 4 billion for H2. Is it still valid, or do you see some risk, like you mentioned, Coral North sliding into 2025? And then the second question is on Lake Charles. So, it's a very large LNG project. FID is still pending, but can you give us an order of magnitude of the size of the project, Technip Energies' share? Because it's a bit difficult to gauge the size given the value scopes and the framework around this project. But is it a $4-$5 billion potential billion-dollar project, Technip Energies' share, or is it lower or higher than that, potentially?
Thank you, Bertrand. I'll start with Lake Charles. Lake Charles, we at Technip Energies are a leader of the JV, and we have KBR as a partner. The project, I must qualify the fact that this project in the US is highly modularized, and I need to repeat that we will not be taking any form of lump sum risk in the US. There's a very large part of the project that would be reimbursable and therefore totally de-risked. We're not taking any lump sum turnkey risk in the US, including in LNG. Okay. The size of the project, it's north of 16 million tonnes per annum. You know the market really well, Bertrand. The potential value of this contract, if it reaches FID, you will be definitely in the areas that you've mentioned, if not a little bit above that.
We can provide more granularity maybe during the CMD if there's more progress on that one, but it would be a significant order considering the size of the project. 16 million tonnes per annum, that's basically two large trains similar to Qatar, etc., but we are a 50/50 JV partner in this. As for H2 2024, yeah, no change to the potential. While we are not controlling FIDs and we are in the hands of our clients for that, we have several prospects, and we mentioned one in our prepared remarks without mentioning it, but the delivery of large modules for projects in Suriname, you would have guessed what I'm talking about. This is a significant order. You add to that the orders that we will naturally book for TPS on a regular, I mean, average run rate basis.
We have a few other things which could be announced. Yeah, confirming what I said at your conference.
Thank you.
The next question is from Daniel Thomson, BNP Paribas Exane. Please go ahead.
Hi, good afternoon, and happy birthday, Arnaud.
Thank you.
Yeah, just two quick ones, hopefully quite straightforward. So, we've spoken a lot today about sort of de-risked execution in the U.S., which, yeah, I think it's a very important point given how many projects there are sort of looking to take FID over the next year or two. On the modular approach, could you just sort of remind us where the modules are fabricated for Technip Energies, and if there is any sort of threat in terms of tariffs that may come up under a certain administration, or would any cost related to that sort of be borne or be reimbursable? And then secondly, to the Qatar North Field, Middle East, can you tell us how close you are to completion on the first train? Thank you.
Okay. Yeah. Thanks.
So, I will not answer your second question because that's a question that you can ask our customers, and they would obviously have a good indication of how close we are to completion, but the project is on track. It's progressing well, and it's something that we signed in 2021. So, I won't say more. As for the modules, well, we have a history of building modules of various sizes in countries like Indonesia, China, Middle East, etc. So, the yards that we are in Southeast Asia, like Malaysia as well, the yards we are dealing with include China. So, but I will qualify my comment. On the execution plans, we're basically preparing for our customers two execution plans. One which includes China and one which doesn't include China, and we have alternatives for module fabrications in other yards than China.
As you can imagine, we as a company, we will not take the Chinese risk. This is something if a client elects to go for China, then it would be his choice, and we will support it, but we will enter into the contract with the right level of protections as a company. No risk-taking by Technip Energies or no exposure to sanctions. If China is selected for the right reasons, then we'll support it. Of course, this is a risk that has to be supported by our customer, and I would say a decision that will be taken jointly with the customer to go for one execution plan versus another one. In the meantime, we've been more than scouting. We've been visiting, signing agreements, and getting comfortable with alternatives. They are obviously mostly in Asia and also in the Middle East.
We are prepared for both eventualities.
Perfect. That's very helpful, Color. Thank you.
Thank you. The next question is from Mick Pickup, Barclays. Please go ahead.
Good afternoon, gents. Arnaud, happy birthday. I've just looked at your age, and you've made me feel a bit older. Can I just ask about the bolt-ons, please, if I may? Expertise in process engineering and piping design, I would suggest the core skills of the company. So, what do they bring, or is that just a shortage you're addressing?
We're growing headcount in the company, Mick. I would say, and we'll provide details during the CMD about that. It's been growing significantly. What this small bolt-on is contributing is something that we can never have enough of: our PhDs and experts related to molecule and process technology, basically. It's chemistry. If there's something that is on very, very high demand in our industry today, our experts in process technology and molecule transformation, and so that's what we've acquired. That's this expertise. Of course, it goes beyond because they were and are doing engineering for our customers. Yeah, there is piping, etc. The core that we're buying is a competency that is a rare commodity. It's process technology and molecule.
Okay. Thank you. Cheers.
Cheers.
Hey, General.
Thank you, Chloe.
Yes.
Sorry, Chloe.
That was the last question. I turn the conference back to you for any closing remarks.
Thank you, Chloe. Today's call. Please contact the IR team with any follow-up questions. Thank you and goodbye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may just go.