Maire S.p.A. (MAIRE) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Maire Tecnimont's Q1 2021 Financial Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pierroberto Folgiero, Chief Executive Officer of Maire Tecnimont. Please go ahead, sir.

Good afternoon, everyone. Thank you for attending the first quarter 2021 financial results conference call. As we leave 2020 behind us, we recorded another solid financial performance in Q1 with over EUR 625 million in revenues and the profitability in line with our annual guidance of 6%. Net income was EUR 17.7 million, up 62.3%. Cash flow generation has continued in the first quarter, leading to a further improvement in the net financial position. As a matter of fact, our net debt has decreased by over EUR 264 million over the last 12 months. This is a tangible sign of our strong financial position. Our commercial activities are running at full speed, and we recorded the highest year-to-date order intake at EUR 2.2 billion. On the other hand, our pipeline remains extremely solid with over EUR 61 billion worth of opportunities, both in our traditional business and in green energy. The latter continues on its expansion path, with more agreements signed over the last few months throughout the world, from Latin America to India and passing from Norway. Moreover, there is maximum collaboration between NextChem and the other group subsidiaries in order to fully leverage our in-house knowledge and expertise to the benefit of our clients. Finally, last week, we paid EUR 38.1 million dividend, a tangible sign of our strong commitment to our shareholders. In conclusion, we are working hard to ensure a successful 2021 and beyond. Let's begin by taking a look at our operational performance. As I mentioned in my opening remarks, the first 4 months have seen the highest amount of order intake ever for this period. As we shall see over the next few slides, these new awards relate to our PetChem and oil and gas refining business. A sign of the strong resilience in downstream and of the strong willingness of our clients to invest in this space, in spite of the pandemic. These awards are geographically diversified, covering Africa, Middle East and Asia and have been granted by existing and new clients. A sign of the superior client retention skills that our group enjoys. Moreover, with EUR 2.2 billion in new orders year-to-date, we have already covered 76% of our mid- of the range revenue guidance for 2021. This should provide significant visibility for 2021 and beyond. It will also provide great confidence that the portion of the backlog, which will be converted into revenues by the end of this year, will be replaced by the new acquisitions. Let us now examine these awards in more detail. Last February, we were awarded 2 EPC contracts by SOCAR, the state-owned company of the Azerbaijan Republic. Both projects worth about $160 million related to the modernization and reconstruction of the Heydar Aliyev oil refinery in Baku. In particular, the scope of the first contract entails the installation of an FCC gasoline hydrotreating unit, while the second contract refers to the installation of a liquefied petroleum gas market and oxidation unit and amine treatment and LPG pretreatment unit. These units are crucial to upgrade the quality of the gasoline to the Euro 4 (sic) [ Euro-5 ] standard. Our group has a long-lasting relationship with SOCAR and with Azerbaijan. Including these 2 contracts, we have been awarded 7 contracts by SOCAR since 2015. In addition, we have been working on another revamping EPC project in the same refinery since 2018. This is a major milestone for Maire Tecnimont Group core business since it allows to further consolidate the group's industrial footprint in the strategic Azerbaijan market and in the crucial natural resources transformation sector. Moreover, it confirms the orientation of the group to leverage its distinctive competencies, technological know-how and synergies among our various subsidiaries as I also commented earlier. This month, our commercial efforts went into overdrive with the awards of 3 sizable and important projects. The first one relates to the rehabilitation works of the 2 refineries switched from the Port Harcourt refinery complex in Nigeria. This EPC contract was awarded by the Nigerian National Petroleum Company and is worth $1.5 billion. The project is aimed after restoring the complex to a maximum of 90% of its nameplate capacity, which is approximately 210,000 barrels per day. It will be delivered in 3 phases, lasting from 24 to 44 months. This strategic award follows a FEED contract, we were awarded in 2019 and that was performed between 2019 and 2020 [indiscernible] to this second phase. In line with our in-country value strategy, we will execute the project maximizing the Nigerian local content with the inclusion and the development of the local communities. In particular, Tecnimont will participate together with the Port Harcourt refinery company in performing substantially projects in favor of local communities. We are proud of this new contract, which is a testament of our technological DNA as well as of our increasing focus on revamping initiative for the modernization of the refining sector, which also provides a solid contribution to the energy transition process. Moreover, we are enhancing our footprint in Nigeria and in Sub-Saharan Africa, an area with excellent upstream prospects given its demographics and the necessity to unlock greater added value from the transformation of natural resources. The second substantial project that was awarded to our group this month relates to the EPC of 2 polypropylene units located inside the integrated PDH/PP complex in Jubail Industrial City 2 in the Kingdom of Saudi Arabia. The project is worth about $500 million and has been awarded by Advanced Global Investment company, a subsidiary of Advanced Petrochemical company, a leading manufacturer of polypropylene products for a variety of industries. Our group will provide engineering services, equipment and out of Kingdom material supply as well as in Kingdom material supply, construction activities, up to start-up and guarantee test run. The 2 units will have a capacity of 400,000 tons per year each. Project completion is expected in 2024. This achievement provides further evidence of our group's global leadership in polyolefins. Our technology-driven approach and distinctive competencies in managing large complex projects. Moreover, this important result represents another significant milestones of our gas monetization strategy, enabling us to be geared up for Saudi Arabia's large wave of investment in downstream. Finally, this week, we signed a contract with IOCL, for an EPC of a new paraxylene plant in Paradip, in India. The scope of work entails engineering, procurement, construction and commissioning activities up to the performance guarantee test run. Once completed, the new paraxylene plant, we have a capacity of 800,000 tons per year. Completion is expected in 33 months. The paraxylene produced will be used to feed the adjacent purified terephthalic Acid unit, thus ensuring availability of world-class feedstock that will provide a significant boost to the country's manufacturing industry. Paraxylene is an intermediate building block for the petrochemical value chain, necessary for the synthesis of several polymers, including PET, which is used in numerous industrial applications, in everyday life, into packaging, cosmetic, pharmaceutical industries to mention some. This contract is further evidence of the long-term relationship that we build with our clients as it is the fifth that we have been awarded by IOCL. It leverages on our unparalleled leadership and expertise in petrochemicals as well as on our extensive presence in India. Finally, we would like to stress the fact that the start of this project will not be impacted by the ongoing health situation in India as the engineering phases will be carried out remotely, leveraging on our digital platform and other competitive advantage of our flexible organization. Thanks to the order intake in the period, our backlog stands at EUR 5.7 billion. Please note that in the figure -- please note that this figure would increase to EUR 7.7 billion, if we will include the EUR 2 billion April awards. 86% of the backlog in our traditional business is represented by gas monetization and energy transition projects as we shall see in more details in a couple of slides. Europe continues to remain our main area of operations, but our backlog is widely diversified across varied geographies around the world. Let's focus now on 2 business units. Starting from the main one, we continue to maintain a good balance between volumes, marginality and duration in the backlog. The E&P portion amounts to about EUR 1.4 billion or 26% of the hydrocarbons backlog. This contributes to the derisking of our existing business a very relevant factor in these volatile times. The backlog cover remains at 2.2x, providing a very high visibility for the future. This ratio would increase to 3x if we were to include the EUR 2 billion April awards. The very important thing to highlight about our hydrocarbons backlog, so is that gas monetization and transition fuels projects represent 86% of the total at the end of March. This is a reflection of our Green DNA and the fact that this group is committed to and is an active player in the energy transition process, which is already a dominant factor at present and going forward. Moving to the commercial opportunities. Our pipeline stands at EUR 54.9 billion. At the end of March, up to EUR 1.7 billion in the first quarter. As the pandemic is starting to loosen its effect on business worldwide, we are starting to see a step-up in client sanctioning of projects, given the ongoing strong fundamentals that characterize the gas monetization and the energy transition businesses. The EUR 2 billion awards in the month of April alone are the clearest evidence of our clients' behavior. As a consequence, we have seen a pickup in the number of tendering and tendered projects, compensated by an inflow of new prospects. In terms of geographical opportunities, the first quarter has seen increases in new prospects in the CIS and Africa. The other regions have been quite stable. Overall, our pipeline remains extremely strong and geographically diversified, providing a solid support to future awards this year and beyond. Let's move now to the Green Energy business unit. The first quarter has seen a variety of green energy agreements that span out 3 pillars, the 3 pillars. Greening The Brown, Circular Economy and Green Green. Following the MOU that we signed with IOCL last November about the development of a Circular Economy in India. Last month, we signed another MOU with Adani Enterprises to explore the development of industrial projects using NextChem and Stamicarbon technology. And MET development, project development capabilities and expertise to industrialize the green chemistry and Circular Economy sectors in India. The projects will focus on production of chemicals, ammonia and hydrogen from renewable feedstock. Our long-standing and significant presence in India will provide a tremendous value-added to this partnership. Last month, we also signed an agreement with Agilyx Corporation to support the development of advanced chemical recycling facilities worldwide. The objective is to use the pyrolysis technology in the conversion of mixed waste plastic into circular olefins and fuels. Initial focus will be on 2 already identified projects in Europe and Latin America. NextChem will act as technology and EPC partner. Finally, last February, we signed a contract with Essential Energy USA to execute a front-end engineering design for the construction of a new biorefinery in South America. The biorefinery will produce 200,000 tons per year of high-quality renewable diesel from advanced biofeedstock known in competition with food. NextChem will act as the exclusive EPC contractor. These and other agreements we are working on demonstrate our utmost commitment to the development of our Green Energy business and position our group at the forefront of the technological innovation in this sector. We are excited that we can play a leading role in the energy transition process, which is taking place across the world and touching every aspect of our professional and personal lives. At the same time, our commercial prospects continue to grow as we pursue a higher number of opportunities across the world. Our pipeline has grown to EUR 6.5 billion at the end of March, with increases in all the 3 phases of the commercial bidding. While a good portion of the prospects is European based. We are increasing our international reach, starting from Asia and the Americas. I now hand over the microphone to Alessandro, who will discuss our financial performance in the quarter. I will be back to provide you with some final remarks. Alessandro.

Thank you. Thank you, Pierroberto. Our first quarter revenues of EUR 625.7 million reflected the expected evolution of the projects in the backlog, having a slightly different mix compared to the corresponding period of last year, with a higher incidence of highly remunerative, but smaller service contracts. In addition, the restriction caused by the pandemic and the seasonal weather conditions have affected the operation in certain geographies. Whilst last year, operations were affected by the consequence of the pandemic only from March onward. Having said that, the extremely significant amount of new acquisitions secured in April, together with other new contracts expected shortly. The natural pickup of activities in the warmer months and assuming a progressive general reduction of the restriction caused by the pandemic, thanks to the vaccination campaign, will lead to the higher level of revenues in the coming quarters, especially in the second half of this year. We continue to pay particular attention to our operating efforts in order to achieve superior returns, also making structural the benefits generated by some efficiency projects implemented in 2020 as part of the cost saving and efficiency plan in order to face the challenges imposed by the pandemic. As a consequence, our contract gross profitability has increased from 11.7% to 12.3% despite lower volumes. G&A were EUR 20.3 million, slightly up also due to the strengthening of our organizational structure in West Africa, in preparation of the recently acquired Port Harcourt projects. Also, please remember that 2020 first quarter G&A has already benefited from the beginning of the massive cost saving plan which was implemented following the beginning of the current pandemic. Our ongoing commitment to green chemistry continues to be demonstrated by a growing amount of research and development expenses up 20.3% quarter-on-quarter. EBITDA was EUR 37.8 million with a profitability of 6%, in line with this year's guidance. Net financial charges were EUR 2.2 million, down EUR 13.2 million. Such an improvement has been driven by a positive effect in devaluation of certain derivative contracts as well as a higher amount of financial income generated by higher level of deposits, especially in foreign currency. The tax rate was 31.1%, in line with our historical average, considering that the geographies where the group has generated taxable income have not changed significantly over the last few years. In conclusion, the positive operating performance, coupled with an appropriate management of financial cost led to a consolidated net income of EUR 17.7 million, up 62.3%, while group income was EUR 18.1 million, up 65.3%. Moving on to the balance sheet. Let's analyze the cash flow dynamics during the quarter. Our [indiscernible] towards lower net debt and the negative working capital continued in the first 3 months of this year. We generated operating cash flows in excess of EUR 50 million, which was the main driver of the decrease in the adjusted net financial position from EUR 116.9 million to EUR 80.4 million, also thanks to the lower net financial charges and despite of cash taxes of EUR 8.1 million. The reduction in the net debt is even more remarkable if we consider that there was basically no advances from clients in the first quarter. In addition and as a reminder of our significant improvement on this front, please consider that the net debt has improved by over EUR 264 million over the last 12 months, thanks to the soundness of our projects and the measures adopted at the outset of the pandemic, which significantly impacted the cash flows in the first quarter of last year. I now hand over the microphone to Pierroberto for his final remarks.

Thank you, Sandro. In conclusion, we delivered another solid quarter with profitability in line with the market expectations. We have the most successful start of the year in terms of order intake, which will provide a solid foundation to 2021 and future revenues. Our Green Energy business continues to develop as new agreements have been signed and new projects started. At the same time, our strong commercial pipeline is expected to deliver new projects, both in the traditional and the Green energy business. As a consequence, we reconfirm our 2021 guidance of revenues in the range of EUR 2.8 billion and EUR 3 billion, a 6% profitability and an improved net financial position by the end of the year. Our investment case remains extremely strong and compelling as we are working hard to ensure a successful 2021 and beyond. This concludes our presentation. As usual, Alessandro and I stand ready to answer any question you may have.

[Operator Instructions] The first question comes from Mick Pickup of Barclays.

Couple of questions, if I may. So firstly, can we just talk about Nigeria? Obviously, you've been looking to get into Africa for a while. That's a very big contract you've got there in Nigeria. Can you just talk about the precautions you're taking for taking on something so large in Nigeria? Secondly, thinking you actually talk about a validation of the Green business within the coming months. Can you just elaborate what you mean about that? Is that that you think there's some major awards come in? And finally, for Alessandro, obviously, a lot of order intake at the moment. Can you just talk how you expect working capital to change during the rest of the year?

Thank you, Mick, for your questions. Let's start from Nigeria. We have been developing Sub-Saharan Africa since quite a lot of time. So we broke the ice with Angola, where we are already working with KT. And then we have, I would say, cultivated this refinery revamp in Nigeria since a lot of time. So as you may remember, we started with a Phase I that was exactly a kind of initial step in order to get 100% prepared to the Phase II that was the implementation of the revamping. And during the Phase I that was activities performed in terms of engineering and in terms of evaluation of the level of intervention to be performed. But during the Phase I, we paved the way in terms of getting along with local engineering requirements and most importantly, getting partnership with the right construction companies for the execution phase. So in terms of technological knowhow, it's a no-brainer. In terms of understanding of the local implications, rather in term -- both in terms of engineering practices, and most importantly, in term of construction practices, we prepared ourselves for quite a lot of time. So that's why I believe that in terms of appetite for risk, we did the right way. We did the right thing. We are fully equipped in terms of knowledge of the local implications, in terms of contingencies. And in terms of risk mitigation in order to take all the rewards coming from an area like Sub-Saharan Africa. Moving to the second question about the validation of the Green business, I believe, every week is more, every week is better. So it is progressively evident that we are going in the right direction. All the products on which we invested, all the decision we took 2, 3 years ago, are proving to be successful. So I'm mentioning the renewable diesel, for example, which is proving to be a very -- the real game changer. At the same time, we are very hot on CO2 capture projects that are popping up here and there, as well as we are focused on circular economy in its 2 variations. So mechanical recycling with upcycling and chemical recycling in a sense, specifically our waste to chemical technology for the conversion of the hydrogen and carbon embedded in plastic wastes. So those products, every week are gaining traction and are gaining pace. So that's why we believe, as I have already anticipated that 2021 and 2022 will be the 2 years in which all these efforts in terms of feasibility studies, turned into engineering, turned into estimation of CapEx investment, but all those efforts will, in 2021 and 2022 and most probably translate into awards, into visibility in the backlog and therefore creating the top line and the margin and the cash flows for the achievement of the expected targets. So I don't want to say that it's downhill. I don't want to say that everything is easy in there, but I'm very, very, very positive on the fact that we are going through the right route. We are going in the right direction. So we are occupying the space. We are becoming a kind of partner of choice whenever you want to think beyond the refining things, beyond the traditional plastic, I think, beyond the tradition of fertilizers. So all in all, again, there is a lot to do. The market is brand new. So it's -- we are pioneering, but we are very positive that we are touching the right -- we are going for the right steps.

Mick, talking about working capital. As you know very well, since you know our group very well. You know that due to our financial structure, working capital moves coherently with our net financial position. Accordingly, since we have already stated that we expect an additional significant improvement in our net financial position at the end of the year, it means that also working capital is moving and will move coherently in that direction to support the improvement in the net financial position. Of course, I am referring to a sort of a stabilized situation. And of course, I do not invite -- I invite you to not refer to a particular quarter whereby when we cash the advances from the clients, of course, in a specific quarter, there could be a particular spike, but then due to the dynamics of our project is absorbed in another quarter. I invite you to look at the progressive movement towards our final goal, which is to maintain a negative working capital and positive net financial position. I don't know yet if we will be able to achieve the positive situation by the end of the year. But for sure, the new project that has been awarded will strongly support this direction already this year.

The next question is from Massimo Bonisoli of Equita.

Congratulations for the strong order intake. I will start with a question on the guidance for revenues. If you can give us an indication of how much of the EUR 2.2 billion order intake will be translated into revenues in 2021? And do you believe now that the upper end of the guidance for revenues is more likely following this strong order intake? And the second question, if you can give us some color on the project with Total Corbion as well as the one with TAIF on the biopolymers? And if you have any other biopolymers project in the pipeline and which technology or formulation will be more unlikely?

On the percentage of the new awards to be translated into revenues in 2021, we typically don't give visibility on the specific numbers, in particular, or better. It is the more so if we consider the peculiar volatile times we are living. Having said that, in order not to step back from your question, please consider that the typical curve, production curve of a project is more or less always the same. So if it is EPC, you have the beginning of the projects or more or less in the first year, you perform the engineering. The engineering is necessary in order for you to complete the engineering of materials and place orders outside to suppliers. And then in the, I would say, in the second half of the second year. And throughout the third year, everything is guided by the construction activities. So it's a kind of s-curve in which at the beginning, the volumes are, I would say, relative, are not that big. Because at the beginning, the engineering in terms of costs is represented by the cost of the people, the internal costs of the engineering hours. So I don't want to give you the exact number. But I want you to appreciate that at the end of the day, the curve is always the same. And volumes start to jump in the second year because as soon as you place the orders to suppliers, then you have critical mass, and then you have the curve that gets steeper and steeper. On Corbion, yes, I'm very -- we are very happy and satisfied and proud of this award because as you may know, Total Corbion is the front-runner in the bioplastic race. Bioplastic is the new frontier. It is the only answer to address the issues of the invisible plastic on the one hand, so it has already a lot of applications because even if the cost per unit is high, nevertheless, is the only viable solution in this specific niche. For the rest, it's an industrial effort to procure that the unit cost goes down. And you know that Total Corbion already built a plant in Thailand, and now they want us to be their partner for the realization of a very large plant of 100,000 tons in Grandpuits refinery. So we are very proud to be kind of companion of journey with such, I would say, best-in-class player in the bioplastics and in particular in PLA. Moving to TAIF. TAIF, it's an old well-known partner and client of Tecnimont since the '70s. As you may know, Tatarstan, during the Soviet times used to be the place in which the central government wanted to accumulate the know-how in the manufacturing of polyolefins. So TAIF takes the legacy of that very prominent industrial leadership. And it is today, I would say, the for -- sophisticated plastics of Russia and Soviet Union. So -- in ex-Soviet Union. So the partnership with TAIF is very old, very fruitful. Now it's time to replicate the same collaboration to explore the new frontiers of the non PetChem plastic, of the bioplastic. So we will join forces with them, evaluate the best available technologies all over the world and then identify how to develop certain ideas that if has already developed themselves. So once again, Tecnimont -- Maire Tecnimont is being picked up as the partner of choice at the moment of rethinking the paradigm for the way forward. So that's why also TAIF, it's a partnership that will pave the way for the future investment of TAIF. Because TAIF has a very serious willingness to replicate their leadership in PetChem polyolefins and to replicate it with a new leadership in new plastics. So you will hear from us from this partnership in the future.

And a quick follow-up question for Alessandro, if I may. In the formal results presentation, you showed the slide with the net working capital evolution for the quarter, just for our models if you can tell us the net working capital contribution to cash flow in first quarter 2021?

In the first quarter of 2021, the working capital has -- substantially has not provided any particular support because more or less has the same amount that we experienced by the end of 2020. So all the cash flow generated in the first quarter comes directly from the operation developed during the quarter. Of course, as I stated before, we expect a significant improvement in the coming quarter, but in the first was more or less neutral in terms of cash flow.

The next question is from Kevin Roger of Kepler Cheuvreux.

I actually have 2 kind of follow-ups. The first one is on your backlog. Can you give us the amount that is mattering in 2021, not just on the EUR 2 billion that you secured, but on the backlog that you had at the end of Q1. If you can provide us the amount that it's supposed to mature in 2021. And another one is a kind of follow-up of each regarding the NextChem and the Green. In the press release, you said that you expect significant evolution. Can you just confirm that when you say significant evolution, you are just talking about, let's say, business and orders or you are talking about also, I would say, structuring in terms of business partnership, maybe independence, things like that. And then I have 2 other questions, sorry for that. So the first one is related to the order intake for the Green division Q1. Sorry, I joined the call a bit late, so maybe you explained that. But can you explain maybe EUR 50 million order intake that you get in Q1 because it's positively surprised us, that surprised me. So what is included in this EUR 50 million, please? And lastly, for, let's say, the overall order intake for the full year. So very strong start of the year. You still have a huge pipeline, you expect to get significant volumes from the Green in the coming months. So what would you consider as a kind of achievable target in terms of order intake for the full year, please?

Okay. Kevin, in terms of revenues, useless to say that, as already stated by Pierroberto, most of the revenues that will be generated in 2021 comes from the execution of the project already in our backlog. So effectively, of course, we are planning to start operation also with the new projects. But the majority, the vast majority of the production -- recording the revenues that we have forecasted for 2021 are -- refers to projects which are already secured and are part of the backlog existing by the end of last year. So it means that because of the phasing of the new projects awards, of course, they will contribute but in a negligible way, more or less everything comes from the project in our backlog.

Moving to the second question about what do we mean by significant evolution of NextChem. As we have said from the beginning, NextChem business model is to develop projects. So we are in a brand new business, in which you don't necessarily collect tender bulletins where you have to develop so you need to join forces as we did with Adani in India, as we did with IOCL in India, as we did with [indiscernible] in Italy, as we are continuing to do. So the first area of expansion is to continue to be partner of choice of the big investors that need to clarify their minds and start to invest in this new business. On top of it, there are also opportunities, for example, in the CO2 capture that are more on the traditional side of the story. So good developments are likely to happen also through this route, through this way. On top of it, we are -- basically, we are pushing forward a lot of feasibility studies that translated into engineering studies up to the CapEx estimation. This kind of deliverable is the input for the final investment decision of clients. And we have a number of initiatives at this stage. And the post-COVID willingness to invest in energy transition is for sure an accelerator of this process. Needless to say that the, let's call, the "recovery fund" is, for example, pushing forward a lot of those initiatives. Because financial instrument like that will, for sure, enhance the IRR of the investment and therefore, the attractiveness for the clients at the moment of taking the final investment decision. So we are very positive also because this abundance of green capital, either from the public sector and also from a certain private money will, for sure, accelerate. Being ourselves the enabler of those projects because we can translate the validation of the technology into a plant, into CapEx. So we can truly enable this new world. We feel ourselves truly involved in something that is very strong, progressively strong and increasingly creating, as I told you before, backlog. So that's why we are saying significantly because we believe it is not only in 2021. It will be a kind of joint period of observation, 2021 and 2022, in which we will demonstrate. So will be the moment of the truth. You are asking if we can give a specific number in terms of order intake for 2021 in Green Energy. This is something we wouldn't like to do because the -- as I told you before, it's -- we are pioneering a new world. The decision process is not the traditional one because every decision-maker is evaluating new risks, new opportunities, new markets, new products, new demands. So it's even difficult to associate a kind of success rate to the tendering, or to the prequalification and pre-tendering. Because it's a world without metrics. So I'm sorry not to give you a quantitative answer, but just a qualitative answer. But believe the qualitative answer is truly, truly encouraging.

Sorry, Pierroberto. It was just looking at the Q1 order intake because in green energy, you have EUR 55 million of orders in the Green division in Q1. So I was wondering if you can give us details on this -- what made those EUR 55 million because it's a positive surprise on my view because you did not announce, let's say, significant contract. So I was wondering what are in those EUR 55 million that you have in order intake in Q1?

Let me say that, first of all, please consider that there are, for sure, a number of small projects. Because as I mentioned before, the business model, it's a business model of selling feasibility studies and engineering studies in order to pave the floor on the ground to larger EPC jobs. On top of it, we work also in the European Union research projects. So from time to time, volumes are also generated by this European Union projects that are very important because they create the participation to a kind of club, in which you get across with the best round for each of these new technologies. So for example, what we did in the Prometheus project it is a project we have announced to the market of what we did in the project with steel production with [indiscernible] in the north of Europe. It is not something that is generating EPC, but it's something that is helping us to occupy the space. So let me say another contribution is coming from that side. The biggest part is from a traditional business we already had in the energy efficiency. So we have also a company that is with long boots in the facility management that we are transforming in the energy efficiency sector. You know that energy transition is made of new technologies, let me say, 1/3. 1/3 of the gap will be covered by circular economy, and 1/3 of the gap will be covered by energy efficiency. So if you look into the European Union studies for the long-term targets, energy efficiency, will be a big driver. So we are also having some good feedback from the market on this kind of, I would say, traditional but new product.

[Operator Instructions] The next question is from Michele Baldelli of Exane BNP Paribas.

I have a question on the recent award of the FEED contracts. Can you elaborate a little bit of potentially how much they can contribute to the orders? If we assume that you will win them the final projects. A rough amount just to mention, a rough amount because, of course, let's say, the precise detail on each project, it could be sensible. But if you can give this kind of some detail, please? And another question relates to investments into waste to chemical by Italian utilities. I've heard that Italian utility is planning to do the same as the Hera, so another utility company. Are you involved in the tendering for such a project or not?

So let's start from the second question. On the partnership with the utility company in Italy, basically, we are interacting with all the market. And we are very focused of Italy and Europe because we believe that Italy and Europe will be kind of lab for circular economy, given the leadership of Italy in circular economy, but most importantly, in the conjunction between circular economy and green chemistry because circular economy can be the way to make green chemistry feasible and doable and sustainable economically. Waste to chemical is exactly in good sense. So by the way, we are kind of ambassadors of waste to chemical throughout Italy, and we are fully equipped and fully referenced to take part to the several initiatives of the country. On your second -- on your first question on the PLA plant, for confidentiality reasons, we are not entitled to give more details than the details already provided by the press release. But again, same as before, in order not to step back from your question, I think you have all the instruments to make your estimation because in the press release, it is mentioned that it's 100,000 tons production per year, which means that it's not a small plant. In the industry, there are parameters for a kind of euro of investment per ton so you can make your calculation. So it's not a small plant. This is because Total Corbion already built a kind of medium small plant. And now they want to play big in Grandpuits refinery. I believe that what Total is doing, the energy transition is truly impressive. Because they are embracing those new ideas, and they are, for sure, front-runner on certain products such as bioplastics.

Gentlemen, Mr. Folgiero, there are no more questions registered at this time, sir.

Thank you. Thank you for joining us today. Thank you.