THNPY - Technip Energies N.V. (THNPY) H1 2023 Earnings Call Transcript

2023-07-29 22:00:22 ET

Technip Energies N.V. (THNPY)

H1 2023 Earnings Call

July 27, 2023 07:00 AM ET

Company Participants

Phillip Lindsay - Head of Investor Relations

Arnaud Pieton - Chief Executive Officer

Bruno Vibert - Chief Financial Officer

Conference Call Participants

Bertrand Hodée - Kepler Cheuvreux

Daniel Thomson - BNP Paribas Exane

Guillaume Delaby - Societe Generale

Jean-Luc Romain - CIC Market Solutions

Victoria McCulloch - RBC

Presentation

Good afternoon. This is the conference operator. Welcome everyone to Technip Energies’ Half Year 2023 Financial Results and Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]

Now, I would like to turn the conference over to Mr. Phillip Lindsay, Head of Investor Relations of Technip Energies. Please go ahead, sir.

Phillip Lindsay

Thank you, Alethia. Hello to everybody, and welcome to Technip Energies financial results for the first half of 2023. On the call today are CEO, Arnaud Pieton; and our CFO, Bruno Vibert, who will present our business and financial highlights as well as the outlook. This will be followed by Q&A. Before we start, I would urge you to take note of the forward-looking statements on Slide 2.

I will now pass the call over to Arnaud.

Arnaud Pieton

Thank you, Phil, and welcome to our financial results presentation for the first half, where we have delivered on a broad range of operational, commercial and strategic objectives.

Revenues of EUR2.8 billion reflect strong momentum in TPS and lower project delivery activity resulting from the maturity of the portfolio, as well as our exit from the Arctic LNG 2 project. But we expect project delivery activity to increase sequentially in the second half.

Strong execution enabled us to deliver 100 basis points of margin improvement year-over-year, and with profitability trending above the full year outlook, we are raising EBIT margin guidance by 30 basis points to a range of 7% to 7.5%. The award of North Field South in Qatar is a key highlight, and when combined with sustained commercial strength in TPS, our backlog has risen by more than 40% year-over-year to nearly EUR19 billion, a record high for T.EN.

Finally, we deployed our strategies through new investments to expand our lab network and digital capabilities as well as technology developments and product launches to enhance our leadership in the markets for carbon capture and the decarbonization of ethylene.

Moving to operational highlights, I will first comment on our exit from the Arctic LNG 2 project which we successfully completed in the second quarter, in-line with the schedule that we have committed to in Q3 last year. The complexity of this exit should not be underestimated and I commend the team's excellent planning and results in reaching this outcome. As a result of the exit from Arctic LNG 2, Technip Energies’ no longer has any commercial or contractual relationship with a project.

Turning to the ongoing portfolio. We continue to make strong progress delivering important milestones de-risking execution and completing projects. This includes the delivery of the world's first liquefied CO2 loading arms to Norway for installation on the Northern Lights CCS project. Overall, I am really pleased with our solid first half.

Turning to the major commercial success of the quarter. In May, we were awarded the prestigious North Field South LNG project in Qatar, a contract for two mega trains, each of 8 million tons per annum that will boost Qatar LNG production capacity to 126 million tons per annum. This award meets all our selectivity criteria. We perform the FEED and have an intimate understanding of the liquefaction technology.

As incumbent, we know the environment, the customer and our partner, all extremely well, and with its large CCS scope and overall energy management solution, it reflects our ability to integrate technologies toward lower carbon LNG. This award also demonstrates the strength of our relationship with QatarEnergy and Qatargas as well as our continued leadership in the LNG market.

As a result of the NFS and the other projects in our portfolio, Technip Energies is executing 35% of global LNG capacity currently under construction. And if I look at the LNG market fundamentals, they remain strong, and we see a robust FID cycle until at least 2025. Beyond Qatar, we are actively engaged on multiple prospects in the Americas, Africa and other parts of the Middle East, and we are confident that T.EN will secure additional awards in the coming two to three years.

Before passing to Bruno, let's take a look at TPS, where commercial success and market penetration is supporting strong revenue momentum in our highest margin segment. TPS benefited from a surge in order intake during 2022 with relatively larger awards in [Netherlands] (ph) and renewable fuels being complemented by strong frontend engagement and services activity across the range of energy transition domain. And while the first half of this year has seen a reduced number of the larger TPS awards, strong order momentum has pushed backlog to new highs, up nearly 80% year-over-year.

This is driving material growth in TPS revenues and underpinned confidence in our medium term vision to reach annual revenues of EUR2 billion, a near doubling of topline versus 2020. This further confirms the strength of our hybrid model, a model which combines a long cycle project delivery business with a short cycle, margin accretive TPS that enables T.EN to deliver strong financial performance across energy cycles.

I will now pass over to Bruno, to discuss financial highlights.

Bruno Vibert

Thanks, Arnaud, and good afternoon, everyone. Let's first look at the highlights of our financial performance for the first half of the year. Adjusted revenues were 13% lower year-over-year at EUR2.8 billion, impacted by the maturity of the project delivery portfolio and the exit from the Arctic LNG 2 contract, partially offset by activity ramping up on Qatar NFE and very strong TPS growth of 45%.

Adjusted recurring EBIT increased slightly year-over-year despite the lower revenues. Thanks to strength in margins which increased by 100 basis points year-over-year to 7.3% and benefiting from solid project execution and the growth in TPS. Beyond the operational performance, certain factors impacted adjusted diluted EPS, higher interest income year-over-year was more than offset by non-recurring items relating to the PNF settlement as well as the technical accounting and non-cash charge associated with our orderly exit from Russia and the sale of our main Russian operating entity. As a result, EPS reduced by 5% year-over-year.

Adjusted order intake for the first half was EUR9 billion, equivalent to a book-to-bill of more than EUR3 million, benefiting from the major NFS awards in Qatar and strong key contribution. Net cash at year-end was EUR2.7 billion, further highlighting the strength of our financial position. So, in summary, a very solid first half, closing legacy items and building up for the future.

Turning to guidance, supported by strong first half execution and as mentioned by Arnaud, we are raising adjusted recurring EBIT margin guidance from 6.7% to 7.2% to a range of 7% to 7.5%, an increase of 30 basis points. The consistency and quality of our portfolio and strength in execution fully supports this margin outlook. For revenue, we expect to sustain momentum in TPS and drive sequential growth in product delivery in the second half, well supported by our backlog schedule. As such we confirm our full year expectation for revenues with a range of EUR5.7 billion to EUR6.2 billion.

Regarding tax the effective tax rate in the first half was above the full year guided range, specifically due to the PNF settlement, an exceptional item that is not deductible for tax purposes. Excluding the impact of the PNF settlement, the underlying tax rate is 28.6% for the first half. On a full year basis, we expect the settlement to have a lesser impact and maintain our tax rate guidance of 26% to 30%, albeit we are likely to be towards the top end of the range.

Turning to our segment reporting and starting with project delivery. Revenues are materially lower year-over-year, reflecting the completion of the Yamal LNG warranty phase and the exit from the Arctic LNG 2 project. The continued ramp up of activity on Qatar NFE and strong volumes in downstream projects are starting to offset this, and we expect H1 to reflect the trough for project delivery revenues. Execution remains strong with notable strength in margins at 7.8%, up 140 basis points year-over-year.

With NFS in backlog and potential for additional projects awards materializing in the coming quarters, portfolio maturity will become more of a balanced blend of early and later stage projects, bringing margins to more normalized level. Backlog has increased substantially by 37% year-over-year to a record EUR16.8 billion, equivalent to more than 3x 2022 segment revenues and providing excellent forward visibility.

Turning to TPS, where our strategic emphasis and commercial focus are yielding very positive results. Revenue growth of 45% year-over-year benefited from strong order of momentum throughout the life 18 months, leading to higher technology and product related volumes, including proprietary equipment for ethylene and services activity in the renewable fuel market. In addition, engineering services activity remains strong with growth in pre-FEED and FEED work across various energy transition domains.

Segment EBIT has improved by nearly 50% versus prior year, led by higher volumes and positive mix, which enabled a 30 basis point margin improvement. Significant commercial success boosted the 12 months book-to-bill to 1.5 and an impressive 78% expansion in segment backlog year-over-year. In summary, TPS is performing at a high level and as Arnaud will shortly address, we are actively deploying our strategy to invest and build on this positive trajectory.

Turning to other key performance items, and beginning with the income statement. Corporate costs of EUR31 million are in-line with the run-rate that we indicated at Q1. As a reminder, the trend higher year-over-year reflects the cost of strategic projects and pre-development initiatives. We continue to anticipate a full year outturn of EUR60 million to EUR65 million for corporate costs, which should normalize closure to EUR50 million in subsequent year.

The net financial income line continues to benefit from central bank decision and higher global interest rates. In the second half, we could anticipate a contribution broadly in-line with that achieved in the first half. Lastly on the P&L, weaker non-recurring expense of EUR34 million. This includes the PNF settlement as well as the non-cash charge associated with the closure of our Russian operating entity which we discussed last quarter.

Turning to balance sheet, where our gross debt is stable and our gross cash remained strong at EUR3.4 billion, notwithstanding working capital outflows and the exit from Arctic LNG 2, which I will come back to shortly. The net contract liability has trended up versus the year-end position reflecting the growth in backlog during the period.

Before passing back to Arnaud, let's conclude on cash flows. Free cash flow, excluding working capital, was EUR179 million and consistently strong, supported by cash conversion from EBIT at more than 85%. As a reminder, the positive impact of interest income is currently providing an upside to a normalized conversion from operational execution. The working capital outflow trend from Q1 partially reversed in Q2, thanks to the initial down payment received on NFS. Although the position year-to-date continues to reflect the maturity of the portfolio and our exit from the Arctic LNG 2 project, as part of this, the cash position was deconsolidated and transferred with the product entities. Other items of note includes the cash dividend of EUR91 million paid to shareholders in May.

I'll now turn the call back to Arnaud, for the outlook.

Arnaud Pieton

Thank you, Bruno. At our full year results, I presented our key strategic objectives for 2023, and I'm happy to report strong progress year-to-date. We have reinforced our growth outlook through strategic initiatives to sustain leadership in our core markets. In addition to the commercial success in LNG, we made strong progress on low carbon ethylene by deploying our E-furnace by T.EN with leading customers in the U.S. to prove the technology at industrial scale. This new product will contribute to our customers fulfilling their decarbonization objectives.

In support of TPS growth, we enhanced our ability to develop proprietary technologies in sustainable chemicals through the acquisition of Processium, a process technology development company with lab facilities that complement our existing R&D footprint in the U.S. and Germany. We also extended our digital offering by acquiring SEED Energy the startup that specializes in digital services for multi-technology renewable energy systems.

Now, in laying the groundwork for our future core, we are focusing on the development of innovative products and solutions that would serve to break some of the cost barriers required for these nascent industries to take off. This includes the launch of Canopy by T.EN, a modular, configurable and integrated suite of post-combustion carbon capture solutions. And the creation of Rely, a new integrated technology and solutions company for green H2 and power-to-X markets, which we discussed at Q1.

Our R&D investments and new product developments are making the path for T.EN’s future business and are consistent with our ESG ambitions. But as these net zero compatible markets are still shaping up, we are positioning in a responsible manner. One that focuses on technology differentiation, one that requires limited capital investment yet creates potential for market leadership and major sources of future earnings.

Before diving into Canopy by T.EN, let me introduce Capture.Now. Technip Energies is playing a key role on the journey towards a low carbon society and these strategically positioned as a leader in CCUS. This is best evidenced by Capture.Now, which consolidates our diverse portfolio of CCS solutions that are available now at scale anywhere in the world. With unique coverage across markets and end-to-end integrated offerings across the value chain, we are designing and supporting our clients' decarbonization initiatives.

With our comprehensive portfolio for both pre-combustion and post-combustion emitters, we are offering practical solutions and removing complexity. And we also have midstream capabilities, notably with our proprietary CO2 loading arms and early stage support for major hubs development. And we are expanding our portfolio with emerging solutions for carbon management and valorization, for example, [indiscernible]. In summary, Capture.Now is our platform to transform carbon into opportunities.

As part of Capture.Now, we recently launched Canopy by T.EN, our new range of integrated post-combustion solutions for any emitter. By combining a leading and proven carbon capture technology, Cansolv, with optimized, modularized architecture and seamless integration, Canopy enables customers to capture with confidence, regardless of scale, industry allocation. This will be particularly important for smaller industrial emitters because we can significantly de-risk project execution, improve schedule certainly and minimize operational downtime.

For the smaller emitters, that is to say those emitting less than 1 million tons per annum of CO2, which represent 80% of all emissions in the U.S. and Europe. We offer a range of standardized solutions, delivered at site, designed for optimum plant integration and ready for CO2 export. But Canopy also extends to bespoke solutions for larger scale emitters. And with a CO2 recovery rate, in excess of 95%, it is compatible with all types of industrial facilities, both new build and retrofits.

Finally, Canopy is digital by design. Our capture plans are fully instrumented and completely automated for unmanned operation and plant performance monitoring. In summary, Canopy by T.EN is an exciting solution for current capture market that will form an important component of our future core.

In closing, our strong first half performance has enabled us to raise our full year margin guidance. Backlog is at a record level, driven by the NFS LNG award and continued commercial strength in TPS. And we are deploying our strategy to sustain our leadership, deliver TPS growth and build our future core.

With that, let's open the line for questions.

Question-and-Answer Session

Operator

This is the conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Bertrand Hodée from Kepler Cheuvreux. Please go ahead.

Bertrand Hodée

Yes. Thank you for taking my question. I have two. The first one is on the Arctic 2 LNG exit and the cash deconsolidation. Is that cash gone or is do you expect to recover in some ways through, I don't know, dividend or cash being returned by the GB, some cash? And can you confirm how much of cash was deconsolidated this quarter? And second question is around your carbon capture offering. Really excited to see how you have modularized the Cansolv offering with Canopy. When do you expect to see the first award with Canopy by T.EN. Thank you.

Arnaud Pieton

Thank you, Bertrand. I will take question number two, and then I'll hand over to Bruno, for the cash deconsolidation. So, regarding Canopy by T.EN, obviously, a very exciting piece of offering. We're really happy that now we have a product that is hitting the market, which is based on a technology that is a proven one. So, it's one that for which there is no question about the performance of its capture rate in particular, the cost of OpEx and the rest. So, it's a very efficient solution from that standpoint. And, the market potentially is massive when considering how much carbon is to be captured as a complement to the rest of the initiatives towards decarbonizing the well. So all in all, a strong offering and a very exciting opportunity set.

The -- for Canopy, so it is likely that’s starting next year, we will see some awards for Canopy, probably the C200, which seems to be one of the optimized one in terms of capacity. But yes, starting next year, we should see a Canopy by T.EN being part of the backlog and the commercial successes.

Bruno Vibert

Okay. Good afternoon, Bertrand. I'll take the first question, on the cash and that we had associated with Arctic LNG 2. So, we exited the Arctic LNG 2 project, which means we transferred and we went out of the two main or the two project entities that we're covering the scope. To do this transfer, this means transferring our rights obligation and basically contractual dealings that these companies had with the suppliers to continue to go and to undergo the project. So this means we -- when we deconsolidated, when we transferred our shares on these two entities, we deconsolidated the cash. We also deconsolidated the working capital notably liabilities associated to that. So, neutral effect, if you take the net asset view between cash and let's say working cap.

In terms of fuel gross cash amount and it's reflected in the cash flow statement, you are looking at something about EUR100 million, which was deconsolidated because it was cash associated with working capital for the project entities for which we exited.

Bertrand Hodée

Thank you.

Operator

The next question is from Daniel Thomson from BNP Paribas Exane. Please go ahead.

Daniel Thomson

Hi, good afternoon guys. Yes, two questions from my side. Firstly, we obviously had the Qatar award and the South and some of your competitors have expressed relatively bullish outlook for LNG FID over the next few years. I was wondering if after Qatar and given this outlook if we should expect any changes to your medium term guidance within project delivery, for revenues around the EUR5 billion to EUR6 billion type of level and if this might get exceeded. Then secondly, on TPS, you've made steady and consistent gains towards building out this business, particularly with the new energy sectors.

So, looking beyond the medium term, guidance that you gave for around EUR2 billion of top line. Could you speak about your longer term ambitions for the relative splits between the [PD] (ph) and TPS divisions? Thank you.

Arnaud Pieton

Thank you, Daniel. So, to start with Qatar, obviously, very pleased with this award, which like I -- as price is ticking all of the boxes that we imposed to our sales in terms of the selectivity principle for a project to make it into our backlog.

So, it's a very important component of our future, and it's entering the backlog in a good condition from the standpoint of the project really ticking all the boxes that are important to Technip Energies’ future.

The outlook for LNG remains strong. We continue to see the potential for this LNG cycle to extend for several years with a pipeline of new international opportunities expanding project visibility out to 2025, 2026 and maybe beyond. Now, we're not going to -- it's not changing our view on the medium term guidance for project delivery. For several reasons, first of all, we want to continue to favor quality over quantity. So while the number of opportunities are large, we will continue to focus on those that are going to yield the best possible performance for T.EN and create the most value for the Company.

We -- the good news is that we are not at capacity fully. Our engineers are busy because there's a high demand for engineering at the moment around the world. And we are very positive about that. In the past, I've spoken about golden age for engineering. So, our engineers, there's no lack of work. Now in terms of how much we can absorb for, in LNG in particular, we probably -- we have room for a couple of more large LNG projects, in particular, as their award is turning to be staggered.

As you know, we don't control the timing of the FID, but the nature of the market is such that the opportunity that we are pursuing are likely to have a pace or a sequencing of FID that is favorable to Technip Energies being capable of attacking them, I would say, serenely because of again the way the sequencing of them and the project that will be actually closing and new ones starting.

So, there's potential for more in terms of how much we can take, but we will concentrate on quality over quantity volume matters, but the performance on the bottom line is equally as important. So, that's why at this moment in time, we are not focusing on changing the guidance from the medium term outlook on project delivery. If we can be in the range that we provided that's ideal, and our efforts will be on continuing to progress TPS to reach the EUR2 billion and to establish TPS at a EUR2 billion, a steady EUR2 billion.

So, almost unquestionable EUR2 billion, baseline of top line revenue and growing the profitability of EPS, we certainly have an objective for TPS to be steady at 10% of EBIT. This is what is animating my team, the team and the commercial teams and the technical teams to establish TPS there. The potential for TPS growth is and I'm not going to give a quantum or numbers on the front, but when you look at the exciting opportunity that Canopy by T.EN is providing.

The launch of new products that are aiming at decarbonizing the hardware based industry, the E-furnace by T.EN is one of the examples, but there's more to come. The range of products that or services that are going to be needed in the domain of sustainable aviation fuel, clean fuels or green H2.

So, in the coming months, you will see an increase, I would say, frequency of new product launch by Technip Energies that are going to fuel or offer solutions in the market and be compatible with the net zero trajectory, because this is where we are focusing and where we are investing on products and solutions that are compatible to achieving or giving you a chance to the world to achieve and reach the net zero target.

As you see more products being launched and solutions hitting the market, and as we are confident in our ability to for our solutions to be adopted by our clients and the size of the market, then it will fuel TPS. And the fact that I think I've discussed that in the past with you guys, there are several ways to grow TPS.

We need more technologies, and therefore, we can sell more licenses. And with technologies, we can also generate more proprietary products. And proprietary products is the way like it was the case last year with ethylene, to actually grow the top line for TPS because the average order, when you sell a product is much higher than the average order when you sell a license, or an engineering services.

So, the more new products and the more novelty, the more innovation through converting into solutions, the more potential for TPS. So, we've not quantified it just yet. There's more to come, and I think we will have the opportunity to talk more about that in a more quantified manner in the future. But for now, we're focusing on launching the products, bringing them to maturity, and making sure that the launches are fulfilling needs and what clients are requiring for the net zero trajectory.

Daniel Thomson

Thanks. That's very clear. Thanks Arnaud.

Operator

[Operator Instructions] The next question is from Guillaume Delaby from Societe Generale. Please go ahead.

Guillaume Delaby

Two housekeeping questions, if I may, two housekeeping questions for, Bruno. So first one, then if I heard correctly, but I heard that corporate cost, which should be between EUR60 million to EUR65 million in 2023 should go down by -- should go down to EUR50 million in the coming years. Did I understand correctly, can you confirm it and if it is the case, why?

And the second housekeeping question is that I’ve have been a little bit by the high level of minority interest in Q2, [EUR13.7 million] (ph). So, I guess there might be a little bit of Arctic LNG 2 with that. But what level of minority interest should we assume for the next two quarters of 2023 and for 2024, 2025. Thank you.

Bruno Vibert

Thank you, Guillaume, and thank you always for giving the housekeeping to me. On the corporate cost, you're right. So this year, we are guiding towards EUR60 million to EUR65 million. This includes some pre-development initiatives for which it's more difficult to plan on go-forward basis. So, this will be part of the decrease. And on top of that, the corporate cost this year include within our guidance a provision, let's say, or all amount for the employee share ownership plan, which is taking place as we speak, and which will be a negative contribution in terms of corporate [costs plus] (ph).

So, as these are more one-off to some extent, we should be able to decrease to a more normalized level, closer to EUR50 million in subsequent year. That's why this year of 2023, is somewhat inflated by a couple of operations.

On your other question related to minority interest. You're right, you have a few entities that can have our constituents to this amount. You have including entities, including in Asia, in South America as well as Arctic LNG 2 for which we were having a majority stake with minority stake.

As we exit the companies, there is more impact or more noise if you want in this line for this year. This should normalize starting 2024, going forward, 2024, 2025 to levels around EUR10 million, EUR15 million, the ones we had in the prior years. So, you could expect to have still a bit of movement in the second half associated to those lines as we complete these entries of exiting all the product entities, associated to Arctic, but then going forward beyond 2023 should be lesser.

Guillaume Delaby

Thank you very much, Bruno. Very clear.

Operator

[Operator Instructions] The final question is from Jean-Luc Romain from CIC Market Solutions. Please go ahead.

Jean-Luc Romain

Good afternoon. You mentioned several future projects in LNG. How close are you to kind of validating the Snap Technology in Texas, I think. Is it still a 2023 potential ID -- potential finalization of contract or is it more 2024 or later?

Arnaud Pieton

Hi, Jean-Luc, thank you for your question. So, the Snap solution is actually ready to deploy from our technicalities standpoint, engineering readiness cost, readiness engagement with yards and the rest, I mean, we've organized the old equity set. So, from that standpoint, it's ready to deploy. As for the rest, I will answer -- like to answer it, as usual, we don't control the timing of the FID and it's a question for our clients. It can be, it could be within ‘23 or into next year if it had at the limit, it doesn't really matter whether it falls ‘23 or ‘24. The important is for us, for the project to materialize. It's more a question for our clients here than for us. So, we are still, we are absolutely engaged.

Now the timing and the likelihood of the FID is definitely a question for our customers. But in terms of us being ready in the starting blocks, yes, we are, and in terms of Snap being mature enough as a solution, to be deployed. Absolutely, it is.

Jean-Luc Romain

Thank you very much.

Operator

The next question is from Victoria McCulloch from RBC. Please go ahead.

Victoria McCulloch

Thanks very much. A couple of questions for me just following up at the end. Could you talk a bit about how you've seen the CCS bidding market evolve over the past, I guess, maybe six to 12 months and how your sort of modular Canopy solution sort of sits into that market and what your customers are asking for. Is this something that you're seeing people getting closer to making decisions on? And secondly, just in terms of project delivery, could you remind me how we should expect to see margins evolve as the NFS contract, it progresses. Yes, just maybe just into the second half of this year and into next year. Thanks very much.

Arnaud Pieton

Thank you, Victoria. So, on the -- I would start on maybe the margin performance of the project delivery segment, and NFS in the context of the rest of the portfolio. The margin performance for our project segment is always driven by a portfolio approach given the many tens of projects that we undertake at any point in time, okay.

So it's always important when you think about Technip Energies and the project delivery segment that you think about it as a portfolio. We have projects that are live. Some projects are closing out, and as they are closing out, we carry out a thorough assessment of potential liabilities, risks, etcetera. And we carry contingencies that over time are being released. So the performance is that of the portfolio, not that of a set project.

So, it is of use that the NFE project, which we signed in 2021, the contribution of the NFE project into our EBIT line, we grow over time, because the project which is now in construction phase. So we are reaching, I would say, a point in time towards the end of the year 2023 where we feel comfortable or more comfortable or even more comfortable with the level of de-risking of the project execution.

So naturally NFE will contribute more in 2024 than 2023 and 2022. So, the performance of the portfolio, again, is that of multiple projects, some in execution, some starting and some closing. And we see that the trajectory for project delivery based on our portfolio is consistent with the trajectory that we set for the Company and what we have been and disclosing and reporting so far this year and on a quarter like Q2 this year. So, the quality and what is in the pipeline is in-line with the performance that we were able to display this quarter. Well, that's on your first question.

On the second question related to Canopy and the carbon capture market. I will start by stating that in addition to Canopy, we released Capture.Now, which is the platform to transform carbon into opportunities. So Capture.Now or through this platform, you can you can see the vast level of involvement that Technip Energies has across the value chain, and across the -- from emission to transport to usage of CO2. We have solutions that are pertinent at every step of the way.

And this rich portfolio is, I would say, being put on the forefront through this Capture.Now platform, you see the rich offering we have. So for us, the opportunity set is, of course, on carbon capture, but it's also beyond that. It's on carbon utilization, it's on transformation. It's really beyond, some transportation through the loading arms and compression and liquefaction solutions. So, we view the carbon capture market not so much, not strictly in isolation, looking at the capture part. It's beyond the capture part. Now the capture part itself, at the moment, in portfolio under execution or under FEED, there's about 30 million ton per annum that we have under execution.

For the world to be on its trajectory, many things need I mean, net zero trajectory, I'm sorry, many things have to happen. Carbon capture is one of the things that needs to play -- come to play, which means that there's probably -- not probably, but twenty times this amount of CO2 to be captured going forward, which means that industries will have to adopt this carbon capture solution, and this is why we went live with Canopy.

The potential is high, it will -- like everything, it is about making sure that the economics are there. It is about -- and that's part of our offering. We not only offer Canopy by T.EN, but we also help our clients with either raising capital or securing the subsidies. So, it's a full service that we offer in addition to the hardware itself and the solution itself.

So, you look at the volume we have currently in the portfolio, the volume that the world would have to be capturing beyond 2025, and you tell yourself, there is definitely a lot of potential and business potential in that space, and we are putting on there. So we see it as a great opportunity for T.EN. But again, it is Canopy. It is beyond Canopy, and it's a full service. This is how you should view our offering.

We come with a product, but we also can hold our clients hands because it is quite new for them for most of them and make the whole venture viable through the subsidies and access to cash.

Victoria McCulloch

Thanks. That's really useful news. If I could just add a quick follow-up to that. So, in terms of both your Canopy project and Canopy products, sorry, and Capture.Now, those are both global solutions that you're offering to really any of your clients. Is that correct?

Arnaud Pieton

Yes. That's absolutely correct. It's global solutions, we have several ranges of solutions, some that are pertinent for the smaller emitters that we were calling below 1 million ton per annum of emissions and some that are pertinent for the larger emitters. Larger emitters can be LNG Producers. We are deploying carbon capture solutions on the NFE and NFS projects in Qatar for pre-combustion. So, for the gas that's coming up the well.

Tomorrow, the next infrastructure may combine pre and post-combustion, and Canopy and the Cansolv technology is actually equally as pertinent. So, you may see going forward, Canopy being deployed on some of the LNG infrastructure as well. So, it's really global. The performance is known, and this is why well we differentiate in addition to a very controlled cost of CapEx to the fact that it is configurable and it is road transportable. The performance of the capture technology is known and is proven.

So, there's no unknown from that standpoint. I think it's important for anyone that is about to make an investment decision to be able to be feeling extremely comfortable with regard to the predictability of the performance of the solution, and Canopy provides that. So, there will be no, I mean, people will be praised actually for being able to report a performance that is -- that is written on paper.

Victoria McCulloch

Understood. And the CCS industry is that as well hand over. I'll hand over. Thanks very much.

Operator

The next question is a follow-up from Jean-Luc Romain from CIC Market Solutions. Please go ahead.

Jean-Luc Romain

Yes. I am following up on actually on carbon capture, we see many companies launching, what they call, ground breaking technologies to capture carbon like when recently was core modular. Do you think there will be a kind of consolidation in technologies and I believe you have advanced on that? Could you to be one of the companies consolidates the carbon capture offering, which is a large and growing for now?

Arnaud Pieton

Thank you, Jean-Luc. So, what is true about carbon capture is that in order to tackle all sorts of emitters, you need more than a single technology. So today, the technologies and Cansolv is one of them, is extremely pertinent for post-combustion and certain level of concentration of CO2.

We as said, actually, we started last year on the matter, I recall I stated that in order to have a complete offering on carbon capture, we needed to master probably more than a single technology. There is the amine technology, Cansolv is one, extremely well known, that is ours or that we are deploying.

You have membranes for absorption or absorption, and that is another way of tackling the market. And you have cryogenic technologies, etcetera. We are extremely active, not at actually consolidating necessarily. I'm not saying this won't be an option, but the primary option that we are looking at the moment is rather to develop a solution for carbon capture that would cover the broader possible range of CO2 concentration.

So, we are concentrating on finding a solution that can cover through a single technology from low concentration to high concentration. And so for us, this is the investment goes and our part of our R&D money goes into that, while deploying existing and proven technologies, so that we have solutions for now. But, we're also working on the solutions for the future, knowing that, like I said, the important is to tackle and unlock a technology that can be pertinent for low concentration too high concentration pre and post-emission. And that's really what is keeping us active more than contemplating today consolidation. I think it's a little bit too early. It's definitely overvalued to our price to consolidate.

So, rather than focusing on that, we are focusing on taking control of our own destiny and being ready with offerings that are pertinent for a very broad range of emitters, because like I said, a single solution is not going to be enough to tackle the challenge.

Jean-Luc Romain

Thank you very much.

Operator

The next question is a follow-up from Bertrand Hodée from Kepler Cheuvreux. Please go ahead.

Bertrand Hodée

Yes. I have one follow-up question again on carbon capture and on Slide 18, where you show your current portfolio of 30 million tons, a fair number of CO2 capture, mainly front end engineering and design studies. But can you disclose the overall amount of that 30 million Mtpa and execution. I know it should be relatively small because it's mostly FEED studies, but if you can share this amount, it would be helpful. Thank you.

Bruno Vibert

Maybe I can start and, Arnaud can complement. So the 30 million ton per annum that we show here is the total amount for projects which are either on FEED stage, front end engineering design, or that have reached the project execution and are either whatever the construction mechanism, EPC EPCM, you name it. The 30 million are not capturing or including those early stage feasibility studies precede all the opportunities that we can consider within the Canopy or others.

So, the 30 million then also cover both pre-combustion and post-combustion carbon capture scope. But these are really for projects in execution, whether FEED or project.

Bertrand Hodée

And so Bertrand, this is -- we've made announcements in the past related to carbon capture, we have many projects under execution and some prospects ongoing. On the prospect list, FEED stage, you're aware of [indiscernible], beside you're aware of ExxonMobil, Baytown Blue H2, the Baytown Blue H2 project, FEED stage, but we'll capture just on this one.

The number was published 7 million tons per annum. So it's a big one. We have obviously the LNG projects that are under execution. Let's also recall ExxonMobil LaBarge, carbon capture. So we've had a series of announcements in the past month, which from FEED to EPC to EPCM are adding up to circa 30 million tons per annum, like Bruno mentioned, excluding all the FEED’s more early engagements or earlier engagements for the FEED studies. So, there's actually a lot more in the pipeline if we were to include those.

It's definitely accelerating. There's definitely a lot of interest by many sort of emitters and industries because at the end of the day, hard to abate, without to abate. And so we are alongside with them, I would say, pave the road towards finding a solution for their projects and their ambition towards decarbonization to be successful. And this is why I said the offering by Technip Energies goes beyond the pure delivery of a project.

We are also here in the same way that we are here sometimes for customers to help with their project financing and orchestrating the project financing, we are here to help our customers define the master plan and get access to subsidies and the rest. And so it's part of a broader offering.

Bertrand Hodée

Thank you, Arnaud.

Arnaud Pieton

That concludes today's call. Please contact the IR team with any follow-up questions. Thank you and goodbye.

Operator

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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Technip Energies N.V. (THNPY) H1 2023 Earnings Call Transcript