Assessing EBIT Margin Expansion and Long-Term Earnings Visibility

Introduction: A New Era in Energy Transition

As the global energy landscape undergoes a seismic shift toward decarbonization, few companies are positioned to benefit as strategically as Técnicas Reunidas (TNISF). The Spanish engineering giant has not only navigated the headwinds of the past few years with remarkable resilience but has also seized the opportunities presented by the green hydrogen revolution. With a robust order book, expanding workforce, and a clear focus on energy transition projects, Técnicas Reunidas is emerging as a critical player in the global push for sustainable energy. This article examines the company’s strategic positioning in the green hydrogen sector, with a particular focus on its EBIT margin expansion potential and long-term earnings visibility.

Financial Performance: A Foundation for Growth

Técnicas Reunidas has demonstrated impressive financial discipline and operational efficiency in recent years. From 2023 through the first half of 2025, the company has seen a steady increase in EBIT margin, rising from 3.8% in 2023 to 4.5% in Q2 2025. This represents a 46% year-over-year increase in EBIT for the second quarter of 2025 alone. For the first half of 2025, the company reported EBIT of €120 million with a margin of 4.4%, driven by strong project execution and improved purchasing conditions.

The company’s balance sheet is equally strong, with a net cash position of €422 million in H1 2025, a 33% increase from H1 2024. This financial flexibility allows Técnicas Reunidas to accelerate project timelines and pursue high-margin opportunities in the green hydrogen and energy transition sectors.

Green Hydrogen Portfolio: A Strategic Cornerstone

Técnicas Reunidas has strategically positioned itself at the forefront of the green hydrogen revolution. The company has secured several landmark contracts that highlight its growing influence in this sector:

• ACWA Power Green Ammonia Plant in Saudi Arabia: This project, with a total CAPEX exceeding €4 billion, will be the largest green ammonia plant in the world, with a capacity of 0.4 million tonnes per annum (MTPA) of hydrogen. The project is a cornerstone of the KSA–Europe Green Hydrogen Corridor, underscoring the company’s role in shaping international energy trade.

• Thyssenkrupp Consortium Fertilizers Facility: A €65 million FEED project that positions Técnicas Reunidas as a key player in the development of sustainable fertilizers.

• Middle East Clean Fuels Facility: A €35 million FEED contract that supports the transition to low-carbon fuels in energy-intensive industries.

• Middle East NOC O&M Digitalization Project: A €20 million contract that highlights the company’s ability to integrate digital technologies into traditional energy operations.

These projects are not just large in scale but also in strategic importance. Técnicas Reunidas is leveraging its engineering expertise to deliver high-impact solutions that align with global decarbonization goals.

Industry Trends: Green Hydrogen as the New Energy Frontier

The global green hydrogen market is on an explosive growth trajectory. The market size was estimated at USD 7.98 billion in 2024 and is projected to reach USD 60.56 billion by 2030, growing at a CAGR of 38.5% from 2025 to 2030. This growth is being driven by aggressive policy support, particularly in Europe, where the EU’s Carbon Border Adjustment Mechanism (CBAM) and investments in hydrogen infrastructure are accelerating adoption.

Regionally, Europe remains the largest market, accounting for 47.47% of revenue in 2024, while Asia-Pacific and the Middle East are also emerging as key growth areas. The company’s focus on projects in these regions aligns with the global shift toward decarbonization and renewable energy integration.

Technologically, alkaline electrolyzers dominate the market, but PEM electrolyzers are expected to grow rapidly due to their efficiency and flexibility—areas where Técnicas Reunidas is already showing expertise through its collaboration in the STELAH project.

Competitive Positioning: A Leader in Engineering and Execution

Técnicas Reunidas is not just riding the green hydrogen wave—it is leading it. The company has delivered over 30 hydrogen units globally and has the capability to provide solutions for all colors of hydrogen, including green hydrogen produced through water electrolysis. This breadth of experience gives it a significant advantage over newer entrants in the sector.

The company’s fast-track execution strategy has been a key driver of its success. By improving purchasing conditions, delivery times, and cost efficiencies, Técnicas Reunidas has been able to enhance its operating margins and deliver value to stakeholders. This approach is particularly valuable in the energy transition sector, where project timelines and cost overruns are common challenges.

Additionally, the company has expanded its workforce to 11,400 employees in 2024, with projections to reach 13,500 by the end of 2025, ensuring it has the human capital to support its growing project portfolio.

EBIT Margin Expansion Potential: A Path to 5% and Beyond

With EBIT margins already improving from 3.8% in 2023 to 4.5% in Q2 2025, Técnicas Reunidas is well on its way to achieving its long-term goal of EBIT margins above 5%. Several factors support this trajectory:

1. High-margin green hydrogen projects: The company’s involvement in large-scale, capital-intensive projects with long-term contracts provides a stable and growing revenue stream.

2. Operational efficiency gains: The company’s fast-track execution strategy has led to improved delivery times and cost efficiencies, which are critical for maintaining and expanding margins in a capital-intensive industry.

3. Strong balance sheet: With a net cash position of €422 million in H1 2025, Técnicas Reunidas has the financial flexibility to invest in growth opportunities without relying heavily on debt, which could further enhance margins.

4. Strategic partnerships: Collaborations with industry leaders like Sinopec, ACWA Power, and Thyssenkrupp provide access to high-value projects and reduce execution risk.

Long-Term Earnings Visibility: A Robust Commercial Pipeline

Técnicas Reunidas’ 24-month commercial pipeline of €72.3 billion and year-to-date backlog of €13.1 billion provide strong visibility into future earnings. The company’s H1 2025 order intake of €3.8 billion underscores its ability to secure new contracts in a competitive market.

Looking ahead, Técnicas Reunidas is considering a revision of its 2025 sales guidance due to project acceleration, which could result in revised upward targets. The company also plans to provide an update on SEPI loans repayment in its Q3 2025 results, which will be a key indicator of its financial health and ability to focus on growth.

The company’s SALTA Investor Day on October 2, 2025, will provide further insights into its progress in the energy transition and sustainability initiatives. Investors should pay close attention to this event for updated guidance on earnings visibility and growth prospects.

Investment Thesis: A Strategic Bet on the Energy Transition

Técnicas Reunidas is a compelling investment for several reasons:

1. Strong financial performance: The company has consistently improved its EBIT margin, with a clear path to exceeding 5% in the coming years.

2. Strategic positioning in green hydrogen: With landmark projects in Saudi Arabia, Spain, and the Middle East, Técnicas Reunidas is at the forefront of the energy transition.

3. Robust commercial pipeline: A 24-month pipeline of €72.3 billion provides strong earnings visibility and growth potential.

4. Operational efficiency: The company’s fast-track execution strategy and strong balance sheet position it to outperform in a capital-intensive industry.

5. Alignment with global decarbonization goals: As governments and corporations accelerate their net-zero commitments, Técnicas Reunidas is well-positioned to benefit from the shift toward renewable energy and green hydrogen.

Conclusion: A High-Conviction Investment in the Energy Transition

Técnicas Reunidas represents a high-conviction investment opportunity in the energy transition sector. With a strong financial foundation, strategic positioning in the green hydrogen market, and a robust commercial pipeline, the company is well-positioned to deliver meaningful EBIT margin expansion and sustainable long-term earnings growth.

As the world moves toward a low-carbon future, Técnicas Reunidas is not just participating in the energy transition—it is leading it. For investors seeking exposure to the next phase of the energy revolution, Técnicas Reunidas offers a compelling and strategically sound opportunity.