Bankinter analysts explain that Técnicas Reunidas (TRE) , the engineering and construction company, has had to face a particularly difficult year due to the pandemic, with delays in the execution of contracts. This has led to a sharp fall in revenues and net cash and a worsening of its margins, forcing it to resort to a participatory loan of 290 million euros from SEPI (Sociedad Estatal de Participaciones Industriales). The share has fallen since the announcement -25%.
The loan requested is structured in two tranches. One of €150m to strengthen equity and the other, of €140m, to improve working capital. It has a duration of four years with the possibility of early repayment. The funds are expected to be disbursed this year.
In the opinion of Bankinter’s analysts, “although the news is positive from the solvency point of view, from the perspective of valuation or business performance, it highlights the difficult moment the company is going through, due to the delay in contracts. In fact, it could suffer future delays. The granting of the loan means the entry of SEPI (public entity) as an observer.
Técnicas Reunidas presented weak H1 2021 results, heavily impacted by COVID-19. With Sales of €1,422M (-33%); EBIT of €43.5M (-45%); and Profit of €163.7M.
The company’s guidance is for sales in 2021 of around €3,000m and an adjusted EBIT margin of around 3%. In addition, they expect order bookings to exceed €4bn. They believe that the commercial environment is improving and they are well positioned in terms of the contracts that will be awarded in the coming months.
Their order book closed the quarter at €9,030m (compared to €10,026m at the end of 2019). High dependence on the oil sector (largely in Saudi Arabia), Upstream and Downstream (95% of the portfolio).
Net cash position declines in the quarter to €94M vs €371M in 4Q 2019. It is therefore strongly affected by the delay in payments. And the loan requested from SEPI allows to increase liquidity.
