Technip Energies: Decarbonization Execution Fuels Long-Term Growth

The global energy transition is no longer a distant ambition but an urgent imperative, and Technip Energies has positioned itself at the forefront of this shift. With its Q1 2025 results underscoring robust execution in liquefied natural gas (LNG) and emerging hydrogen projects, the company's diversified project pipeline and backlog visibility are key drivers of its long-term growth potential. As the July 31 earnings report approaches, investors should pay close attention to this engineering powerhouse, which is leveraging its technical expertise to capitalize on the $13 trillion energy transition opportunity.

Q1 2025: Strong Execution Amid Transition Challenges

Technip Energies reported a solid start to 2025, with revenue growing 22% year-on-year to €1.85 billion, driven by major LNG projects in Qatar and the ramp-up of its GranMorgu facility in Algeria. While the adjusted backlog dipped 7% to €18.2 billion from Q4 2024, this reflects the natural progression of large projects into execution phases rather than a slowdown in new contracts. The backlog remains a robust 2.7x FY 2024 revenue, with €4.7 billion expected to be recognized in 2025 alone.

The Project Delivery segment—accounting for €16.25 billion of the backlog—benefited from progress on Qatar's North Field Expansion, the world's largest LNG project. Meanwhile, the Technology, Products & Services (TPS) segment, which includes hydrogen and ethylene technologies, saw margin improvements, highlighting the company's ability to monetize its intellectual property in high-growth sectors.

Hydrogen and Decarbonization: The Next Frontier

While LNG remains the backbone of Technip's current backlog, its hydrogen initiatives are fast becoming a critical growth lever. The H2Teesside project in the UK—though not explicitly detailed in Q1—aligns with the bp Net Zero Teesside Power Project, which began construction in early 2025. This facility, designed to produce low-carbon hydrogen using carbon capture and storage (CCS), is emblematic of Technip's strategy to dominate the emerging green and blue hydrogen markets.

The company's Rely joint venture with John Cockerill further underscores its ambition. Partnering with Verso Energy to develop seven e-fuels plants globally, Rely aims to produce 500,000+ tons/year of sustainable aviation fuel, a market expected to grow at 18% annually through 2030. These projects rely on green hydrogen, positioning Technip as a critical supplier of the technology and infrastructure required to scale such ventures.

Strategic Diversification Beyond Energy

Technip's Reju subsidiary is another underappreciated asset. Its partnership with Cibutex to create a circular textile ecosystem—processing post-consumer waste into Reju Polyester™—not only reduces carbon footprints but also opens new revenue streams. With its Frankfurt-based Regeneration Hub Zero operational in 2025 and plans for global hubs, Reju could become a model for industrial circularity, attracting ESG-focused investors.

Investment Thesis: Buy Ahead of Q2 Results

Technip Energies' stock has underperformed peers in recent quarters, but this presents a buying opportunity. Key catalysts ahead of the July 31 report include:

• Backlog Visibility: The €18.2 billion backlog provides near-term revenue certainty, with FY 2026 and 2027 allocations already secured.
• Margin Stability: Despite Q1's Project Delivery margin dip (8.1% vs. 8.5% in Q4), the segment's FY 2025 guidance of ~8% EBITDA margins reflects management's confidence in cost discipline.
• Hydrogen Upside: The H2Teesside and Rely projects are expected to contribute meaningfully to future backlog, as the July results could include new contract wins in this space.

Risks and Mitigants

• Execution Risk: Large projects like Qatar LNG and H2Teesside face delays. However, Technip's track record—evident in its on-time delivery of 98% of equipment for Neste's Rotterdam refinery—suggests robust project management.
• Macroeconomic Volatility: TPS segment guidance widened due to “macroeconomic uncertainty,” but this segment's ethylene licensing margins (+180 bps YoY) demonstrate resilience.

Conclusion: A Top Play in the Energy Transition

Technip Energies is not just an engineering firm—it is a decarbonization enabler. With a backlog that guarantees revenue visibility through 2027, strategic investments in hydrogen and circularity, and a pipeline of over €70 billion in opportunities, the company is uniquely positioned to capitalize on the energy transition. Investors should view dips in its stock as buying opportunities ahead of the July results. Hold for the long term; initiate a position with a 12–18 month horizon.

As the world pivots toward cleaner energy, Technip's execution prowess and diversified portfolio make it a compelling buy. The next quarter's results will likely reinforce its leadership—a signal that the energy transition is no longer a distant goal but a present-day reality.