2023-11-15 15:04:05 ET
Técnicas Reunidas, S.A. (TNISF)
Q3 2023 Results Conference Call
November 15, 2023 10:00 AM ET
Company Participants
Juan Lladó - Chairman
Eduardo San Miguel - Chief Executive Officer
Conference Call Participants
Robert Jackson - Santander
Ignacio Doménech - JB Capital
Álvaro Lenze - Alantra
Kevin Roger - Kepler
Baptiste Lebacq - ODDO
Presentation
Unidentified Company Representative
Good afternoon and welcome to TR's 2023 Nine Months Results Presentation. It will be conducted by our Chairman, Juan Lladó; and our CEO, Eduardo San Miguel. It will last approximately 20 minutes and you will be able to pose your questions after the final remarks.
I now leave the floor to our Chairman, Juan Lladó.
Juan Lladó
Hello everyone. In today's presentation, as usual, Eduardo and I will drive you through a summary of TR results and the more relevant milestones achieved during this last third quarter. Through these presentations, we would like to submit how TR step-by-step is consolidating its recovery and getting ready to full benefit from the promising future ahead of us.
In the last nine months, we have successfully worked on all critical fronts: financial, commercial and execution. For this particular quarter, on the commercial front, we have accomplished several major achievements that deserve to be explained in detail, and I will personally drive you through these charts, these achievements. And then Eduardo will follow with a successful progress of Track, our energy efficiency unit, and obviously the financial figures for the period. And finally, I will conclude with the guidance of the year.
Let's start with the more relevant awards focusing in the natural gas and petchem segment. As I am sure, you will remember, we reported our first half results on July 20th. And up to that date, we had booked slightly less than €2 billion awards. However, at that time, we highlighted that we were preferred bidders and also were placed for another €4 billion of additional awards. At that time, jobs were at the tip of our fingers, but not ready to be announced. Nevertheless, that day, 20th of July, we gave a guidance of awards of €5 billion.
Today, things have changed. I am happy to share with you that, as of today, our awards have more than tripled since our last work increasing from €1.8 billion to €6 billion. During the summer period, we were selected by ADNOC for its key development of MERAM and also by QatarEnergy for strategic projects that are carrying out in the Ras Laffan Industrial City.
And then I will go over these two awards in a minute. Moreover, in the last few weeks, we have received a letter of intent of an award for a major strategic natural gas project in the Middle East. And it is a job worth €2 billion for TR, that's TR stake. This project has already been launched internally and we will share all the details with you as soon as we are allowed.
Finally, our strong commitment with Track, our energy transition business is starting to pay off much above our expectations that we had by the end of the year. But Eduardo will go over this and we will get into details in just a minute. All of this implies that we are doing better than the guidance of €5 billion plus that we showed in our Q2 webcast back in July, July 28th.
And now let me drive you through our main recent awards. In August, ADNOC awarded, as I have said, the complete development of the MERAM project in a JV between TR and NPCC. This key project is focused on maximizing the ethane recovery from available residue gas, thus allowing ADNOC to expand capacity under several existing petrochemical units.
The overall investment for the complete project amounts to $3.6 billion, 50% is for TR and another 50% to NPCC, with whom we are extremely happy to partner. NPCC, which has been recently rebranded at NMDC Energy, it’s a major local EPC player with its headquarters in Abu Dhabi, and it is majority owned by the State of UAE.
It is worth mentioning as well that TR and NPCC have been successfully working together since September 2021 through a firm agreement signed for the development of front-end design projects for our customer ADNOC. By joining efforts with the NMDC Energy, the new name of NPCC, we will together best manage execution and therefore risk in a much more -- in a very important and large investment that we have to execute for ADNOC. We do have a very good partner.
Furthermore, as well this summer, QatarEnergy awarded Técnicas Reunidas the balance of plants and the Northfield project in Qatar. The balance of planned awards represent the fourth one in a row in the last 24 months, which demonstrates a consolidated partnership that TR and QatarEnergy have built over the last two years.
The project consists in the development of several facilities that will have to be connected and will connect the southern part of Ras Laffan Industrial City to the new LNG storage tanks and to all the export facilities located then in the northern part of the Ras Laffan Industrial City.
And the value of this new contract, and as I said, it's the fourth contract awarded this year, in last 24 months -- sorry, amount for more than $560 million. And on this project, we can best manage the risk, and we will manage the risk, correctly as the scope of work is part in fact, it is an addition of Package 3 job, which is already under execution by TR.
Finally, I would like to focus on two projects of great future important for TR that have not been already announced. The first one is a front-end design for QAPCO, Qatar Petrochemical Company. In terms of value, a front-end design does not represent a big addition to the backlog right now.
However, quality wise, it is very important. And why it's very important? First of all, because it's a front-end design on a PDH polypropylene plant, which confirms the confidence on TR's petchem engineering design capacity. And second, because it is an award coming from a major petrochemical player, Qatar Industries or Qatar petrochemical company that will surely convert this front-end design into an EPC in the coming future.
The second award was announced by our customer at the very end of July, RWE Germany's largest electricity producer, which awarded the development of a combined cycle to joint venture formed by Técnicas Reunidas and Ansaldo Energia, the Italy's Ansaldo Energia. This facility will initially use up 50% hydrogen mixed natural gas with the potential to upgrade to a 100% hydrogenous feedstock. The project has started with an initial phase where the client has to obtain all required permitting after which DPC will come into force.
And now let's go through this slide that all of you are quite familiar with. When I first showed this slide some months ago, I told you that I was convinced that 2023 was going to be a good year. And as you have seen, this has already been confirmed.
Just in 2023, TR is bidding as we'll continue bidding volumes that are going to about €33 billion, most of them related to the first investment wave of natural gas projects. These 33 billion cover not only the projects that have been awarded or will be awarded during 2023, but many of the projects that our clients will sanction and most likely award during 2024. But this investment strong cycle is definitely not over in 2024.
As you see in this slide here on the right hand side of the screen, we already expect to submit new bids for about another €30 billion. That is the main change here. The main change is that the composition, the composition of the contracts where now petrochemical and low carbon technology project is starting to gain momentum. And most important of all, TR will continue to be very selective in our bids during 2024 will be selective with the right jobs, the right customers, and the right partners. And as I said in my note, we'll focus on profitability and risk management.
And let me continue with another very important achievement, important milestone reached in this last third quarter, and that is our strategic agreement with Sinopec. At the very end of this third quarter TR centered into a key strategic partnership with the ready partner and Sinopec, one of the most relevant players in our sector worldwide.
This is an alliance with a strong benefit for both parties due to our complimentary, complimentary capabilities, and the extraordinary joint EPC player that we become together. And this is very important. I'd like to underline that. We together have joined the identify more than 20 bps in different parts of the world, such as the Middle East, north Africa, and South Asia, with a combination of TR and Sinopec efforts and convinced we leaders for sure to a successful outcomes.
And now after this, let me leave the floor to Eduardo to guide us through the latest developments on track in our three quarter results.
Eduardo San Miguel
Thank you, Juan, and good afternoon, everyone. On next slide, I will conclude now is first part of the presentation that we have called Main Achievement with an update of the latest developments of track our Energy transition unit. We can proudly confirm that our 2023 goals for Track have been fully accomplished. Let me analyze them one by one.
First, we have reached €300 million in awards more than 10x the figure achieved last year. To be honest, we have excelled our initial expectations. We are talking about the volume, a volume of main hours equivalent to those main hours needed to develop lump-sum projects, amounting close to €2.5 billion. And I also want to stress the expected bids for 2024 will be 5x higher than the volumes we had in 2023.
Second, we have fully established our new platforms in order to strengthen our position in the main hacks of investment of energy transition. On the one hand, we have launched our U.S. platform through our new track office in Houston, Texas. On the other hand, as we have already announced, we have reached a very important agreement with IFC to develop projects in Eastern Europe. We are extremely confident that both platforms will contribute to secure a volume of significant awards in the upcoming future.
Third, under our diversification strategy, we have achieved relevant milestones in the process of penetrating the steel and cement market. The volume of investments in those two industries in the carbonization will be similar to the volume of the energy sector. In fact, we are extremely proud to announce the award of the biggest decarbonization project up to date in the steel industry in Europe. For the time being, we are unable to disclose the name of our client under terms of this mayor award, but I will try to give you some color about it in a specific slide later.
Fourth, as you all know, one of the main goals of Track is the development and the structuring of energy transition projects from a scratch. In this sense, TR has already identified a fast-emerging project development pipeline with more than €4 billion in new opportunities. And last, but relevant as well, we are taking solid steps in offering carbon management services to our clients. In this regard, we have reached an important partnership for carbon transport with Ecolog and for its storage with Storegga.
Let's analyze now the most important award that Track has received in the last quarter. As I said before, we are proud and excited to announce that one of the major steel players worldwide has relied on Técnicas Reunidas to carry out the major decarbonization investment in Europe up to date. It consists on the decarbonization of four of their most relevant facilities, located in three different countries in Europe.
The contract is structured into stages. The first one includes the fit, purchase of the main equipment and soil preparation works. The second stage will cover the detailed engineering, the procurement services and construction supervision. To give you a hint of the size of the facilities we will be working for, I would say, the joint production of these four facilities amounts for about 15 million tons per year.
We have another two important awards in the energy transition segment that we include in this slide. I do really regret not to be allowed to disclose the name of our clients again, but as you can imagine, they are key strategic projects and our customers prefer to remain anonymous.
The first one is an EPC for an E-FUELS demo unit in Spain. The contract scope includes services, supply, assembly, pre-commissioning, commissioning and support during the start-up of the demo unit. And the second one is the Basic & Detailed Engineering services for two green ammonia projects in two different locations in the Iberian Peninsula, one in Spain and the other one in Portugal. We hope to be able to disclose additional information in future webcasts, if the clients authorize us to do so.
And now let's have a look to the financial figures for the first nine months of the year. In terms of sales, Técnicas Reunidas continues to register quarterly figures of more than €1 billion, reaching €3.2 billion in the first nine months of the year. This figure implies an increase of more than 50%, compared to the same period of 2022.
The EBIT of our operations continues to grow, and already stands at 4% in this third quarter of the year. The successful delivery of our project obviously is behind this solid improvement of margins on a quarterly basis. And let me highlight that, this is the fifth quarter in a row that EBIT margin rose versus the preceding quarter, reconfirming Técnicas Reunidas' positive trend in the last year.
Moving to balance sheet figures. As you can see in the slide, the net cash position expands at a healthy €234 million level at the end of September. This figure does not include any down payment of the recent awards. We will be collecting those down payments soon, some of them before year end, and we will pass part of these down payments to suppliers to secure a smooth launch of the new project.
For the next month, we anticipate a certain stability, stability in our net cash figures, since our strategy today is to accelerate existing projects through enhancing our suppliers' cash cycle. We believe it is the most efficient way to drive forward the project scale and meet our clients' expectations.
And now I will hang over the floor to Juan.
Juan Lladó
Hello again. Thank you very much, Eduardo. As usual, this is guidance time as and so let me conclude with this presentation with a slightly revised guidance. Now that the disability for the rest of the year is obviously much higher, we can update the gardens for 2023. On the commercial side, I would like to reiterate our firm convention that investment cycle, super cycle, we call it now, has already begun. We were above our initial guidance for 2023 awards, now it's more than €6 million.
And I can tell you I continue to be optimistic for the upcoming months. Upcoming months, it have to be this year, but I month in general and I'm optimistic of activity is high. Regarding our revenues project program has been accomplished as planned and it will conclude with ‘23 with a slightly higher figure than originally forecasted. That's why we have a plus on this slide.
And finally moving to our EBIT forecast, as you know, we had that is first half of 2023 with an EBIT margin of 3.6. And as Eduardo has previously analyzed, the Q3 figure has already increased to 4%, demonstrating that the margin recovery in our operations continues. So for the entire second half of 2023, we expect to reach a level of 4% of above everything depending of the year end operations, new jobs and delivery of ones in the next few weeks.
So after that, we done with this presentation and we all here very happy to answer any questions that you may want to address to us.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from Robert Jackson from Santander. Please go ahead.
Robert Jackson
First question is related to your ongoing derisking strategy. Can you shed some light on what sort of derisking you have achieved in the awards year-to-date, please? That'll be my first question.
Juan Lladó
I mean, if you go, let's do a quick analyze, what have we done through this year? I mean, we have the job catalog, which we started with the fit with a conversion strategy. Obviously, the day we convert is the job has been well de-risked as we have defined procurement then engineering and define construction strategy with our customer. Hanseatic is Germany, we could have done it by ourselves. I mean, we are the one have to know how to do LNG terminal. But in order to better execute and the risk, we have gone with two partners that will run the construction.
Turkey was established in Germany and FCC Spanish company very good on the civil side with whom we had worked before in this specific activity. Obviously, we used MERAM in Abu Dhabi very often we have gone by ourselves. In this case it's a 3.6 billion job, and we are executing the job with MPCC, which is one of the main contractors in the region, very good in construction management, very good in modelization expertise, obviously in the region and more so in Abu Dhabi. So, we have a strong partner with whom to manage the risk as we set.
I also plan we're by ourselves. This is a traditional lump-sum or we’re by ourselves but it is in addition, so to speak, of Package 3, which is the one with the worth towards about a year ago, if I remember well. We know the site. We know the subcontractors. We had been able to measure every single detail of the job. So is the job that, as I said on my slide, we could manage the risk quite efficiently. I mean, I was going to say nicely, but risk, but never managed nicely.
The job for that we have seen all the steel mills in Europe are on service. It's pure service. Everything is cost plus. It's quite similar to the one we have with the nails. So, it's -- we have to have quality engineering because it's important for the customer quality, procurement, design, and management because it's important for the customer and then help the customer in supporting construction. But we know running EPC lump-sum risk and then the letter of intent that we have announced in the Middle East that we cannot declare the worth until we are allowed to do so. I can anticipate you that we have a construction partner.
So, I don't know if you want more details, but as I've…
Robert Jackson
That's okay. That gives us a better idea. The second question is related to the Sinopec agreement. You mentioned as a company you have a complimentary relationship and you identify projects in North Africa, Asia. Why has Sinopec gone with Técnicas? What do you have to offer that they could have gone somewhere is basically that’s the question?
Eduardo San Miguel
I mean, Sinopec, we have not met each other a year for the Beijing, we've gone a long time together. We have done jobs with them as subcontractor for construction and as well as partners. If you go back, our old jobs, the largest refinery ever built from scratch, which is in great. We did it in a JV with Sinopec.
We have worked over the last 18 months together thinking about which jobs to do together. We came to the conclusion that we bring a lot to Sinopec. I mean, let me tell you, we have probably more experience in complex project management in general. We are better process engineers. They don't get into process engineer for better process engineers. We have stronger references.
But let me tell you, Sinopec is a very good, it is powerful construction company. It's quite good in some segments of engineering. We have the experience of having worked together very successfully. And Sinopec realizes in us too that together we make a very powerful JV, very powerful.
I mean some of the bottlenecks in the market, which is not only engineering, it is construction in the Middle East, but with Sinopec, we are much stronger. Engineering can be process, but you have the types in civil engineering, many engineering in Sinopec is strong on that. So, we bought together. We are very attractive.
Robert Jackson
And with this agreement, will it be more or less 50-50? Or was it very depending on the projects?
Juan Lladó
It has to do with job-by-job basis. It doesn't have to be 50-50. It depends what is the scope of setback or what is our scope or what is our appetite or their like different jobs for different countries or different regions.
Robert Jackson
Okay. And my final question is related to the decarbonization process or projects. I think we are working or doing projects for one of the largest steel producers in Europe and probably in the world. Will this give you opportunities to do to leverage off of these projects in Europe to do projects elsewhere in the world such as the U.S, where you are recently starting off with your transition? And then are you also discussing potential opportunities with other cities today?
Eduardo San Miguel
Robert, this is Eduardo. We have quite a bit of interest as well, so you can complement my answer. We have seen opportunities, I would say, all around the world. Obviously, our first stage customer has always to do with Spain. We have a number of projects here. We are developing projects, and we are also being called by our traditional clients to develop projects in the country. So obviously, that is our primary market, and we are doing things currently here, trying to learn and to obtain a good track record to offer our clients in the future.
Second, we have, as I told you before, two clear targets. The first one has to do with the U.S. We have been in the U.S. the last week. I have seen a large representation of Técnicas Reunidas no less of 10 people. And basically, we were talking about an energy transition with every client, not only with our traditional client, let's say, Exxon. But with any other new potential trend that has to do with the oil and gas business. But also, we have been talking with new companies that are very focused on energy transition developers.
I would say, I don't know how to describe it. It seems, it is a world of infinite opportunities. And also, we have realized that, there are many Spanish companies that could act as off-takers of the products that can be produced in the States. So, it makes this country very attractive for us because we are the technicians, we have the off-takers, we know the financial markets. So, the number of opportunities we have there is huge.
Here in Europe, we have -- we already have projects. We have projects in the Netherlands. We have project in the United Kingdom. I'm talking about decarbonization. I am talking to waste methanol, bio diesel, bio fuel. There are many opportunities around in different countries, and obviously the opportunity we have in the Middle East -- not in the middle, sorry, in Eastern Europe due to disagreement with the IFC open to us, and a number of new opportunities. And we are currently detecting those new projects we want to share with the IFC as co-developers.
So, for me, it's difficult to tell you where the opportunities because the opportunities are all around. I don't know if – I guess sorry, it reminds me that cement seems to be an extraordinary opportunity. The European legislation is requiring cement companies in Europe to implement certain measures to reduce significantly the carbon that is being sent to the environment. And these guys have to do it. It has to happen in the forthcoming, I don't know two, three, four years. But it has to happen.
And we are there and we are already talking with the five major 17 industries in Europe, trying to select which are the right projects to start working for. So, the good news is there are many opportunities. The venue is we have to select, which is the correct one.
Operator
Your next question comes from Ignacio Doménech from JB Capital. Please go ahead.
Ignacio Doménech
My first question is on Track. I believe you mentioned during the presentation above €300 million awards, but in the nine month results, I believe you were mentioning a €100 million of related to Track projects. So just wanted to clarify, if the awards from Track among €200 million or these are larger in size?
And then my second question is related to the down payments that you also mentioned in the release that are not included in nine months net cash position. So just wanted to have your view because I would assume you would have already received some of the down payments. So just wondering, where do you see net cash position by your end?
Juan Lladó
Sorry. I've been trying to understand, which are the differences and to be honest, I still do not understand where the difference is coming from? But to be clear, we are €300 million awarded. 250 have to do with pure services. Around 50 million has to do with something that is not pure service. And this is the size of the awards of the quarter to be fully clear.
And the second question is down payment of new awards. But what was the question? Sorry, because I was -- well, we were talking earlier about the future. Well, as of today, I mean, the 15th of November, we still have not collected the money of those down payments, but we are currently issuing the invoices and it will be -- the money will be here late November, early December. That's our expectation.
But we are talking about the project. We are fully disclosed because the project that it's only an LOI today, and probably the down payment will come in the first month of 2024, okay. And that's the way they're going to flow. And we will try to, as I told you before, or as I told when I was describing the cash situation, we will try to pass as much money as we can from these on payments to the suppliers and the local contractors. We need to launch the project because it's tight in terms of timing and we have to do it.
Operator
[Operator Instructions] Your next question comes from Álvaro from Alantra. Please go ahead.
Álvaro Lenze
The first one would be regarding the Sonatrach, Hassi Messaoud project and whether you could provide some update on what are your expectations on the project and maybe executing it or the changes in size or whatever color you can provide on that front?
The second would be moving into 2024 and probably 2025, just to understand the dynamics in terms of revenues and margins and how your changes in the mix of your contracts should affect that? I don't know if the new contracts like cost plus have lower revenue contribution, but higher margins or whether you should continue to deliver on this roughly 4 billion sales and 4% margin going forward?
And lastly would be going back to the working capital question. The first is when should we expect this significant improvement in operating performance to translate into positive cash flow generation? And also, maybe on a long-term basis, what should we expect in terms of working capital going forward? Should you continue to receive financing from working capital or is the new type of projects more working capital neutral? Or should you invest more than you have in the past in working capital until project completion? Thank you.
Juan Lladó
Hi, Alvaro. I focus on the first two questions, and then Eduardo will answer question number three. Hassi Messaoud showed things in Algeria, in many fronts are improving and we continue little by little, and this is slow in conversations with our partner and Sonatrach, which is also a change in management, and different ways to move forward with this project. So I cannot give you a lot more color, but we are there -- we are in good conversations with the customer.
What are the dynamics of margins? So you have seen that we have been improving margins, as we progress on execution and we get in new awards. We are optimistic. We have to be prudent, and we don't like to use these Q&A to give guidance. I think the guidance all I can give you is that, I am optimistic. I am optimistic that because of the new jobs, because of the activity, because of the customers wanting to run and because our customers have a lot of money and very profitable jobs.
And that's why we have to get we're getting that payments. We will be getting that payment. There has to be a spend right away to pay the supply chain, so we can run and deliver and therefore make money for us and for our customers in this new cycle and optimistic cycle, investment cycle will see better margins. And as we are seeing very healthy awards, very much derisked, but all I think it is too early. I mean it's too early and, let's not get too excessively optimistic with these quarters that are being good in order to go to the market and start giving guidance that we don't want to.
The message is we are doing good or better, that we are being very successful with awards. It is also true that our mix of awards in as steel mills fits. It doesn't affect us very much, but it just gives us a little margin cushion, just a little bit. It is also not easy to manage because it requires a lot of our engineers. So, it is operation wise sometimes a constrain, and margin wise, it can be translated into slight margin improvement, margin cushion.
So let me now pass the third question to Eduardo.
Eduardo San Miguel
Okay. Working capital is currently normalized, I would say, little by little. When you have a look through our figures, you see that we are reducing the size of our accounts payable, the size of our account receivables. We are reducing the volume of debt we have with financial institutions. So, it is a fact that we are doing the things correctly, and the balance sheet already reflects some improvement.
But you are right and you’re right, we will see better figures in the future and just when now, that's going to be the trend. For me, it is difficult to predict exactly when, but something is clear to me. I have today around €6 billion awarded out of the backlog that is in the range of €10 billion. And that will be the figures by the year-end give or take.
I believe once the delivery -- the backlog fully normalizes because now I have projects at the very last stages and some projects are in the earlier stages. But when the backlog fully normalizes, we will see a solid generation of cash coming from our operation, that's my feeling. If you want to ask me when? I think the second half of the year, next 2024, we will to see a significant increase in our net cash position. It will be a consequence of the normalization of the operation.
Operator
Your next question comes from Kevin Roger from Kepler. Please go ahead.
Kevin Roger
Thanks for taking the time. I have few questions, if I may, and I really understood that you do not want to provide any guidance on the EBIT margin for the coming years. But just in terms of rationale, you are guiding for a marginal slightly above 4% in H2, usually you were saying that over the midterm the margin would be around 4%. Is there any reason why the margin would be lower at the beginning of ‘24, that at the end of ‘23, because if you have a refreshed backlog that the contracts are secured on a better terms and condition, et cetera, I guess your marginality should continue to improve just in terms not committing in terms of numbers, but is there any reason why the margin should be lower in ‘24 than what you end in terms of performance in ‘23? That would be the first question.
The second question, sorry if I missed that, but the partnership with Sinopec, just wanted to understand are there any discussion with your new partner to maybe reinforce the relationship whatever the solution that you are talking on?
And the third one is on the technology side of the energy transition story with not the Track. It seems that the technology side will be very, very important, especially on subject like carbon capture. So what would be your key strategy here on technology? Are you trying to acquire some key technologies developing internally your own patents technology based on the naming solutions, for example? So globally we track what would be your strategy on the technology side, please?
Eduardo San Miguel
I know, sorry, Kevin. When we're talking about a four plus, my message is clearly we are a 4% in the fourth quarter, but we are closing very early on projects from today till the end of February. I will be traveling around the world together. We have one trying to close projects with our clients and our suppliers.
We have done our estimation and we know, give or take, where we are going to finish. And there is a margin -- as more margin, additional margin that can be achievable. And that's why we say four plus. So, I think that talk about anything above 4% is not realistic today. What we are currently delivering is a 4%. That's my message for you.
The second question, we have missed it, but probably we can answer the third one again and then go back to the second one.
Juan Lladó
Well, regarding technology in the energy transition, well, first of all, I think we have always been, and we are still being technology agnostics in low carbon technologies. That is that -- well, we are already building a long network of partnerships with different technology sensors in every vertical in hydrogen.
The full hydrogen value chain, circular economy, carbon capture, and this is, I would say, and strength from our point of view in the sense that we are working with different technologies, understanding and assessing different performance, different CapEx for different projects. And this, I would say gives a very good understanding of the technology landscape regarding the energy transition.
Finally, for carbon capture, what you mentioned, well here, our approaches the same above as I have already said. But also we are building a carbon management service practice. What that going to do is to provide an end-to-end services to larger meters. That will get the carbon from their plants, look a site, transport it, and then give a use or a storage team. So, and this is our strategy regarding carbon capture.
Eduardo San Miguel
Kevin, let me add -- because we know we were in the United States last week and we were talking about different technologies, and we've always seen this house we've been talking inour business, petrochemicals, refining technology is always in our mouth. In our process department, we always talk about the different technologies.
And as a strategy and as a strategy, we have a lot of in our petrochemical business as well, a lot of thinking and a lot of analysis is do we become close to technology or are we agnostic? Agnostic is not negative, it's positive. And that means are we good in working with Lummus technology on a cracker? Or is it better to work with the KBR technology on a cracker? In our case, we've worked with both. Okay.
We don't want to be any -- so you invest in a technology, in a new business, it might give you a leverage, but if you get it wrong, you're debt. That's so we have to make a decision in between making a bet and have the leverage, and then not have the best technology and other technologies not working to work with you because there is something that is called technology contamination. And then in that you get for a while.
So what you see in our business, there are a lot of people that decide to be good with all those technologies have a very strong process department, very large workshops that we have in continue having with accents, France, KBR, United States, Lummus, European, in the United States, but are not being tied up to any technology.
The same thing in combined cycles, in combined cycles, we're probably one of the very few ones they are able to work with all technologies. Siemen, Mitsubishi, GE, we've done a work and now recently with Ansaldo. And why with Ansaldo because Ansaldo's technology has some technology with whom we had worked before.
So knowing a technology and being able to work with is important. Owning a technology can give you big leverage, which is true, I fully recognize, but is 10x an aggressive that and we’re following the different strategy. I don't know whether that has answered you.
Kevin Roger
Clearly, it's very clear. And the question on Sinopec, it was just to know you have signed this partner fee to bid jointly on some project. I was just wondering if you could consider this partnership to move forward with [indiscernible] maybe a JV a common entity. So if there are any discussion to move ahead or if a partnership like that would be more than enough.
Juan Lladó
I think for the time being, I mean, you see our business is, I mean, for the time being, let's have a premature life and then we'll think about whether we want to get married or not. So to put it in a way, we have already had that premature life. We worked with Sinopec in Kuwait, in Saudi Arabia we have that experience, and we've made a step forward and said, let's look for the market that we good at and for other markets. So it's a strong alliance with teams that are going to go through that alliance in both financial and commercial and execution and on -- but for the time being, it's an alliance fully signed at very single level, and you’re going to see us working with them in new jobs extremely soon.
Operator
Your next question comes from Baptiste Lebacq from ODDO. Please go ahead.
Baptiste Lebacq
Just a very quick question regarding your bidding pipeline. In 2023, you said that, you bid or you are bidding on around €33 billion, and you are targeting around €60 billion of the wealth, meaning that it's circa 20%. And I know that the calendar could be different between bidding and awards. For next year, you are targeting €30 billion of bidding. Can we imagine that due to the mix, you have more low carbon take though in the mix in terms of bidding, you will be able to keep this 20% of success ratio? What is your thought regarding this, let's say, dynamic in terms of success for next year?
Juan Lladó
It is very difficult to do some sort of a ratio analysis, percentage analysis, really in this business. If I would have to sign for that 20%, I will be signing it right now. It would be better, and we had years that are for better, as we are -- as the market develops and the market gets full because everybody is getting full. Our contractors are getting full, subcontractors are getting full, suppliers are getting full through this year with a lot of activity that would allow us to be more selective and probably even improve the rate of success.
So if I have to say anything, it is that our rate of success should improve and not get worse. But again, we haven't got the crystal ball. So, that 20% is fair. But I mean, the reality is that it's even higher as we have won a lot of jobs with following a derisk strategy with partners. So in terms of volume, the percentage of -- we think we did quite well in terms of being selective, and with the job sets that we have talked before out of the big pipeline that we were bidding and selecting. And we have been quite successful. We have been successful on customers and partners as well.
Baptiste Lebacq
Okay.
Juan Lladó
And it might bring confusion because part of the bidding of 2023, as I was trying to present before, it has not yet been awarded. You may -- thus, we are in the bidding process today, we have presented bid and that will be sanctioned first quarter we guess of 2024.
So it is like a moving target. Sorry to be so imprecise. But the answer is that we have done quite well really.
Baptiste Lebacq
Okay. Fully understand your message. And maybe just one last question, if I may. It is regarding, you just mentioned that everybody is getting full and also subcontractors and so on. On which part of the supply chain you are today more careful than a couple of months ago? Is there some bottlenecks according to you or some specific components on which you should be more careful? Thank you.
Juan Lladó
Usually, like in any business, I mean in this business, the problem comes at the end, the tail of everything which is construction. Construction resources, which they all get mixed up because all jobs don't get finished. New jobs starts and the problem is on construction. And that's one of the beauties of our Sinopec alliance.
Operator
There are no further questions at this time.
Juan Lladó
Thank you very much all of you. This was third quarter, so year-end will be, if I remember well by the end of February, we'll have to full year results and audit results as well.
So thank you very much for listening to us and posting questions and being active. And see you in -- I'll talk to you in February.
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Técnicas Reunidas, S.A. (TNISF) Q3 2023 Earnings Call Transcript