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Lowering TechnipFMC's FVE and Incorporating ESG Framework

Preston Caldwell Senior Analyst

Analyst Note

| Preston Caldwell |

We're lowering our fair value estimate for TechnipFMC to $24 per share (EUR 18) from $25 (EUR 21), mainly because of industry-specific factors. We’re particularly concerned about the low profit margins among the offshore engineering and construction companies (TechnipFMC, Saipem, and Subsea 7). Their financial performance looks dismal compared with the large diversified-services companies, whose operating margins have soared past prepandemic levels. To some extent this is attributable to long-lasting contracts employed in offshore E&C (meaning their results tend to lag other oil-service companies), but this explanation doesn't entirely assuage our concerns. Therefore, for now we are reducing midcycle operating margins by an average 100 basis points for the group. However, TechnipFMC has fared somewhat better than the group over the last year, driven by uptake of its unique integrated project offerings. We expect this outperformance to continue.

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Company Profile

Business Description

TechnipFMC is the largest provider of integrated deep-water offshore oil and gas development solutions, offering the full spectrum of subsea equipment and subsea engineering and construction services. The company also provides various surface equipment used with onshore oil and gas wells. TechnipFMC originated with the 2017 merger of predecessor companies Technip and FMC.

One St. Paul’s Churchyard
London, EC4M 8AP, United Kingdom
T +44 2034293950
Sector Energy
Industry Oil & Gas Equipment & Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2019
Stock Type
Employees 37,966

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