Apr 25, 2022
Operator
Good day and thank you for standing by. Welcome to the Technip Energies First Quarter 2022 Results Call.
At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.
[Operator Instructions]. Please be advised today's conference is being recorded.
[Operator Instructions]. I'd like to hand the conference over to your first speaker today.
That's Phillip Lindsay, Head of Investor Relations. Please go ahead.
Phillip Lindsay
Thank you, Sarah. Hello to everyone and welcome to Technip Energies first quarter 2022 financial results presentation.
On the call today are CEO, Arnaud Pieton, and CFO, Bruno Vibert, who will present our business and financial highlights as well as the outlook. And this will be followed by Q&A.
Before we start, I would urge you to take note of the disclaimer and forward-looking statements on slide 2. I'll now pass the call over to Arnaud
Arnaud Pieton
Thank you, Phil. Welcome to our financial results presentation for the first quarter.
Before addressing the situation in Russia, I will first cover the highlight. Revenues of €1.6 billion included around €414 million related to Arctic LNG 2.
Operationally, we delivered in line with our plan, with significant year-over-year growth in activity outside of Russia, as well as improving margins and good cash flows. In the quarter, we've reconfigured the organization structure around four business lines focused on Technip Energies market and supported by a global delivery structure dedicated to delivering projects and solutions.
This will better align our operating model and commercial focus with the rapidly changing energy transition markets. In addition, we have invested in and strengthened our energy transition business, notably in the domains of hydrogen, floating offshore wind, and biochemicals.
I will return to this later in my presentation. Finally, orders of €550 million were broadly in line with our expectations for the quarter, leading backlog at period end of €15.6 billion.
This includes the Arctic LNG 2 project which was not subject to sanctions as of the end of Q1. Excluding this project, the period-end backlogs stood at €12.2 billions, which represents 2.8 times 2021 revenues on an equivalent basis.
Turning to Russia. We have done what we said we will do, taken care of our people and ceased to work on new business opportunities in Russia.
We've carried out our activities in compliance with all applicable laws. And we continue to provide a transparent view of our situation.
Our priorities are unchanged. And we are working to safeguard the interests of all our stakeholders.
Notwithstanding the escalation of sanctions, Arctic LNG 2, our only active project in Russia, continued to progress in Q1, albeit under increasingly challenging circumstances, not only for logistics. The April 8 European Union sanctions, however, now target goods and technology related to LNG.
These will naturally have a more direct impact on the future execution of the project. In anticipation of the escalation of the sanctions, we have been working with clients, partners, and suppliers within the relevant contractual frameworks to take the appropriate measures in connection with Arctic LNG 2.
We expect that the balance sheet position of the project and the relevant contractual protections will be sufficient to fulfill our various contractual obligations in compliance with applicable sanctions. Turning to our execution.
I will not go into detail on the slide, but confirm that we continue to make strong progress delivering project milestones, closing out projects, and derisking ongoing work. While the situation in Europe has improved for now with respect to the pandemic, it remains a source of continuing restrictions in many parts of the world in which we operate.
Our teams continue to adapt and find solutions, and our activity for Q1 is in line with our plan and financial framework. So, despite a difficult external environment, we are delivering good progress in both projects delivery and TPS activities.
Now, let's take a look at recent awards, where I will focus mostly on front-end positioning in the energy transition market within TPS. In floating offshore wind, we made good progress in qualifying our in-house Inocean floating technology in the quarter, and we are delighted to recently announce that Equinor has chosen Technip Energies and our INO15 technology for a FEED related to their 800 megawatt floating wind farm offshore South Korea.
In the market for renewable diesel, we were awarded a FEED study for Future Energies Australia's first biorefinery project, which plans to convert sustainably-sourced biomass into renewable diesel. Our participation in the carbon capture market continues to gather pace.
In the quarter, alongside our partner, NPCC, we were awarded a FEED contract for the Kasawari CCS project in Malaysia with PETRONAS, a project which is expected to process around 3.5 million tonne per annum of CO2, making it one of the world's largest CCS project. Separately, our subsidiary, Genesis, secured the offshore FEED for the Northern Endurance Partnership in support of the East Coast cluster development in the UK.
Turning to project delivery, where the decarbonisation theme continues to influence the more traditional industries, we were awarded an EPCC for a melamine plant in Malaysia, an award which follows our execution of the FEED study. The 60,000 tonne per annum plant utilizes an alliance partner technology we know very well and will recycle the CO2 generated in the melamine production process, serving to minimize the CO2 footprint of these new assets.
I will now hand the call to Bruno.
Bruno Vibert
Thanks, Arnaud. And good afternoon, everyone.
So, turning to the highlights of our financial performance for the first quarter. Adjusted revenues grew by 4% year-on-year to €1.6 billion.
This included a full quarter from Arctic LNG 2, which, as Arnaud stated, was not under sanction throughout the period and contributed €445 million to revenues. Revenues excluding Arctic LNG 2 increased by 18% year-over-year, and TPS momentum continued with high-single digit growth.
Adjusted recurring EBIT was €107 million, equating to a margin of 6.6%. That's a 70 basis point improvement versus first quarter 2021.
The impact of Arctic LNG 2 was slightly dilutive for the quarter, with margins benefiting from solid execution across the rest of the project portfolio, as well as higher activity levels and improved margins within TPS. Net Profit growth is substantial at nearly 65% year-over-year to €72 million, reflecting the solid EBIT performance, as well as a more favorable comparison as the first quarter 2021 incurred the majority of costs relating to the spinoff from TechnipFMC.
As a side note, prior to the end of the first quarter, TechnipFMC's stake in Technip Energies has reduced below 3%, with the overhang now mostly eliminated and the selling pressure on markets largely behind us. Adjusted order intake was €550 million without major project awards, and was sharply lower versus the €6.5 billion in the prior year, which of course included a very large Qatar energy award.
Book-to-bill on a trailing 12-month basis at 0.6 is also impacted by Qatar falling out of the equation. Net cash at period-end was €3.3 billion.
In summary, a solid start to the year, which puts us on track with our full-year financial framework. Turning to our segments reporting, and starting with Projects Delivery.
Given the ongoing uncertainty surrounding Arctic LNG 2, we are continuing to provide the transparency to enable the Street to analyze the performance both with and without this project. Overall revenues grew modestly at 3%, but this masks very different trends within the portfolio, with a significant 23% growth in the portfolio excluding Arctic as key projects award from the last 18 months continue to ramp up.
This more than offset a material decline in Arctic LNG 2 where the revenue contribution was €120 million lower year-over-year. The first half of Arctic was expected to represent the peak in activity for the year.
At this point, it remains difficult to predict what the contribution in the coming quarters could be, given the changing sanctions regime. Adjusted EBIT for the segment was €90 million, equating to a margin of 7%, up almost a full percentage point year-over-year.
Margins benefited from a strong contribution from downstream projects in the latest stage of completion, as well as the contribution from Yamal LNG. This was partially offset by earlier stage LNG projects, and included a slightly dilutive impact on Arctic LNG 2.
Trailing 12-months book-to-bill was 0.5, reflecting a steady flow of order intake in the period following the award of Qatar in the first quarter of last year. Backlog declined 30% year-over-year to €14.4 billion.
And as we've stated several times in the past, we continue to exert discipline in commercial selectivity and we are more than comfortable with a period of backlog decline as we look to preserve backlog quality. FIDs in the current volatile pricing environment have led to some decision push to the right, but we've not seen any cancelation of prospects.
On the contrary, we do see good opportunities in the coming quarters to selectively add to our project backlog. Overall, a solid underlying performance by Projects Delivery.
Looking now to Technology, Products & Services where momentum has continued into 2022 with high-single digit revenue growth and mid-teens growth in EBIT. Revenues of approximately €330 million, up 8% year-on-year, benefit from growing activity levels in engineering and PMC services and sustained process technology activity, including licensing and proprietary equipment, notably for ethylene and sustainable chemistry, including PBAT biodegradable polymer.
EBIT margins improved by 70 basis points to 9.2%, consistent with the margins achieved in 2021 as a whole, and benefiting from improving activity levels in mix. thanks to strong revenues and margins, EBIT in absolute terms increased by 15%.
Order momentum remains strong, with TPS orders keeping pace with the growth in revenues on a 12-month basis, delivering modest backlog growth year-over-year to €1.2 billion. We see good potential for continuous backlog additions in the coming quarters in the areas of sustainable chemistry and proprietary products relating to the upcycle in the ethylene market.
Turning to other key performance items across our financial statements, and beginning with the income statement. Corporate cost of €12.8 million are slightly above run rate for 2021, but impacted by two main factors.
Nearly €5 million of negative FX impact and some reclassifications between corporate and other lines. Overall, the cost base remains a clear point of management attention and global SG&A are slightly down year-on-year.
R&D investment at €11 million is materially higher year-over-year, and we do anticipate a 30% to 40% decrease in R&D during 2022 on targeted spent relating to our energy transition strategy and consistent with our mission to grow the technology content of our offering. At around 29%, the effective tax rate is in line with the lower half of our financial framework for the year.
Turning to balance sheet. In response to the situation in Ukraine and our exposure to Russia, we conducted a goodwill impairment test in line with accounting practices.
And based on conservative assumptions, I'm pleased to confirm that our goodwill remained intact with more than ample headroom. Before looking at cash, I would like to acknowledge that, on March 11, Technip Energies was downgraded to BBB- investment grade rating by S&P.
The revised rating was really linked to S&P's decision to discount Arctic LNG 2 from their model, which has triggered a requalification of the company's business risk profile. This does not have any material impact on our operations or costs.
Finally, another strong free cash flow quarter has bolstered our net cash position to €3.3 billion, which remains above the net contract liability of €3.2 billion. Before passing back to Arnaud, let's take a closer look at cash flows, where there has been a continuation of many of the trends seen in 2021.
Namely, free cash flow benefitted from the working capital inflow of €86 million relating to customer advances for recent awards and key milestone achievements on other large projects, as well as project-related working capital variations. Free cash flow on an underlying basis or net of working capital was €99 million and consistently strong as we executed across our portfolio.
Cash conversion from EBIT on this basis is very high. As a reminder, we expect to be able to deliver a consistently high free cash conversion from EBIT net of working capital in the 70% plus range.
Capital expenditures remained low at €9 million, consistent with our asset-light model. And below free cash flow, the key items include repayment of short-term commercial paper and leases of approximately €70 million and €25 million related to share repurchase.
As previously announced, this is principally to offset dilution from current and future long-term incentive programs, with the timing somewhat opportunistic given the depressed share price during the quarter. We ended the period with more than €3.9 billion of cash and cash equivalents.
And I will now turn the call back to Arnaud for the outlook.
Arnaud Pieton
Thank you, Bruno. Turning now to the outlook.
Our energy transition strategy is further supported by our strong balance sheet and cash flows that allow for a flexible capital allocation. In the quarter, we announced three investments in the markets of hydrogen, offshore floating wind, and biochemicals.
These expand and diversify our technology portfolio while enabling new business model opportunity. Taking each of these in turn.
First, hydrogen where we announced a strategic partnership and investment into Hy2gen as part of a €200 million capital raise, the largest in the industry to date. Hy2gen is a developer of green hydrogen-based fuels or e-fuels for maritime and ground transportation, aviation and industrial applications.
And it has a large and relevant pipeline of projects related to green hydrogen and hydrogen derivatives, such as green ammonia. The business model here for us is twofold.
An equity model with secured access to project development in exciting areas and an operating agreement where we will provide engineering services pre-FID across the portfolio and PMC and O&M services support as well as optionality for EPC. Secondly, in offshore floating wind, we acquired a 16% stake in X1 Wind, a renewable energy startup with an innovative and disruptive floater technology that brings major environmental and operational benefits.
The concept is based on the tension leg platform mooring with a weathervaning system and its unique downwind turbine. This allows for lighter design with significantly reduced steel requirements and a more efficient and restricted mooring system that minimizes the impact on seabed.
We will bring and contribute our engineering and industrialization capabilities to scale the X1 technology to 15 plus megawatt turbines, which can really be cost effective for large scale offshore wind farms. With this investment, we enlarge our portfolio of floating offshore wind technologies to include CLP alongside the semisub that we have through Inocean.
Finally, in the biochemical space, we have acquired Iowa Corn process technology, which produces MEG or renewable plastic from surplus corn plant based feedstocks. This acquisition strengthens our circularity portfolio with a differentiated and sustainable feedstock for PET resin production.
We'll advance the development of the technology, build the pilot plant and ultimately commercialize and license the technology. Turning now to LNG.
It is experiencing a dramatic shift in market dynamics, which further strengthened a key pillar of our equity story. Prior to the Ukraine crisis, the shortage of gas in Europe was pushing up prices and stimulating demand and project activity.
The war has exacerbated this trend, with Europe in urgent need of securing supply. Russia supplies the equivalent of 130 million tonne per annum of natural gas via pipeline to Europe, which may no longer be acceptable.
And pre-war, Russia was forecast to supply meaningful incremental LNG over the coming decade, which may now be compromised. For Europe to cut its dependence on Russian gas, massive investment will be required.
While acceleration of renewable energy and additional piped gas from countries such as Norway can potentially help, vast majority of Europe's gas demand will, we think, have to come from LNG, which is inherently more flexible than gas in a pipe. Europe is rapidly developing plans for more LNG imports, and we believe North America and the Middle East are currently the best positioned regions to respond.
The current situation also means a structurally higher value for LNG in the long term. Beyond the traditional large train export terminals, which naturally will be required, the viability of other solutions, including floating LNG and midscale LNG, has improved materially.
Our leadership and experience position us well in LNG and floating LNG. And we can leverage our proprietary SnapLNG concept to modularize electrified low carbon and methane free solution with a compressed time to first drop.
In summary, the war in Ukraine has driven an exceptional change in the market outlook for LNG, and Technip Energies has the means to deliver a variety of low carbon LNG solutions. Turning to ESG.
In the first quarter, we published our ESG roadmap. And in our sustainability and annual report, we set out targets to reduce our Scope 1 and 2 emissions by 30% by 2025 and to reach net zero by 2030.
We also made a commitment to report on Scope 3 in 2023. We know Scope 3 will be larger than Scope 1 and 2 as these consist of indirect emissions from our construction activities and procurement and from our customers' plants operation.
So far, we have been able to assess and disclose our Scope 3 emissions related to our subcontracted construction activities. But Technip Energies has a complex value chain and many custom-made projects.
Time is needed to assess our full Scope 3. In 2022, we plan to complete the screening and calculation of our Scope 3, which will enable us to start reporting and working on the reduction plans and target.
In line with our ESG roadmap, we are committed to strengthening our accountability and will report on our progress annually through our sustainability report. In closing, with our solid first quarter performance, we are confirming our financial framework for the full-year 2022.
We continue to shift the focus of the organization towards energy transition related areas, both organically and through selective investments, and the energy independence agenda is taking center stage and will likely drive a wave of major investment across natural gas related infrastructure and renewables. Technip Energies is ready to play a leading role in this market evolution.
And with that, let's open the line for questions.
Operator
[Operator Instructions]. The first question today is from the line of Sasikanth Chilukuru from Morgan Stanley.
Sasikanth Chilukuru
I had two please. The first was related to the LNG opportunities in the US.
In the last earnings call, it was mentioned that you were engaged with the developers of midscale LNG, primarily on the basis of delivering a solution that is modular, fully electrified and with limited construction lump sum risk. I was just wondering if you could comment on the progress made there and perhaps some color on the incremental discussions that you've had related to these projects.
The second question was related to the revenue guidance of €5 billion to €5.5 billion for 2022. This is of course excluding Arctic LNG 2.
The current backlog cover is more than 100% at the bottom end of the guidance and about 92% at the top end of the range, both of which seem quite high. In that context, I was just wondering what do you think are the key risks in achieving this 2022 revenue guidance?
Just wondering if this relatively conservative guidance right now, has it got to do anything with the de-phasing of revenue over the next three quarters?
Arnaud Pieton
I will start and take the first answer and hand over to Bruno for your question number two. So, LNG opportunities in the US and North America are indeed real.
And you are right to point out to the model that will be Technip Energies' model for addressing those opportunities in North America where, as you know, we do not want to take on lumpsum risk around construction. And it's just very natural because in a country that is near full employment, I think it's the right thing to do to find other solutions than to stick build an LNG infrastructure over there.
Our involvement with LNG developers in North America have, I would say, accelerated during the course of the past six to eight weeks. And we have put forward our solutions under, what I would call, an EPF model, which is engineering, procurement and fabrication, whereby the solution that we are putting forward are really about a modularized solution.
Yes, electrified and low methane, et cetera. So, the key for us is really to discuss with the developers the scheme whereby the modules are fabricated, I would say, outside of the US and brought to the US Gulf Coast ready to be connected to each other and one another.
The good thing is that the developers we've been talking to, all, I would say, are adopting this model. They are all supportive.
They do realize that in order to bring more LNG capacity to market, that's probably the good way forward. So, yeah, I feel pretty good about the pipeline of opportunities, and I hope to be able to announce more FEEDs in the coming weeks or coming months related to LNG North America, but, again, always in the EPF model, engineering, procurement and fabrication.
The good news for us is that through this high level of modularization, you not only modulize the liquefaction trains, but you can go as far as modularizing as well some of the utilities, therefore, really, really reducing the need for local labor and workers, which we know is a challenge in North America, in particular.
Bruno Vibert
In terms of coverage and backlog for the remaining parts of the year, as you say [indiscernible], we have a very good coverage. As you've also seen, we have a ramp up of the activity ex-Russia that's increasing from 2021 to 2022 and we expect some buildup.
We also have seen and everyone has seen some of the continuous challenges in logistics and China with a new wave of COVID. So, still some volatility in there.
So that's why, for the time being, we've kept the final framework as it is. We know we have the backlog to be able to deliver on that.
As you also know, we are not obsessed with top line because revenues that could be shifted from one month at the end of the year to next year doesn't really change anything. So, for us, it's all about execution – executing the projects well across the portfolio, even in more complex environment, just as the one we've been operating on over the last two years.
So, yeah, we have the backlog. Relatively prudent, to some extent, lower range, but still complex environment in which we have to abide.
Operator
The next question is from the line of Guillaume Delaby from Société Générale.
Guillaume Delaby
My question is about Russia. So, when you say in your 2021 guidance that you are excluding Russia, basically, you are excluding Arctic LNG 2, but you are still including in your guidance Yamal LNG.
Just would like first to be 100% sure about that. This is my first question.
And my second question, and I'm sorry you are not going to like it, is after 2022, in 2023, should we expect, I would say, Yamal cleave. I know that investors and analysts have been expecting a Yamal cleave for nearly decades.
But is there a risk of a Yamal cleave in 2023 for your margin?
Arnaud Pieton
Short answer to your first question, Yamal is indeed included in the financial framework that we've provided for 2022. And then, as for your second question, it could be a very short answer as well.
No, we are not expecting a Yamal cleave in 2023. Why are we able to say so?
It's related to the quality of the portfolio, the rest of the projects that we are currently executing, as well as those that will lose projects and prospects that will eventually make it through our backlog, knowing the conditions under which we'd like to onboard projects. So, derisked and with a minimum level of profitability that is in line with a trajectory that I, together with Bruno and the rest of the team, we want to give to the company.
The trajectory for profitability is the one that we indicated. So, we started life conveying the message that we had a 100 basis point improvement to our financial performance.
I would like to confirm that potential. And that is, obviously, not accounting for Yamal, which is ending at the end of this year, in terms of its contribution to our performance, our financial performance.
So, really, not expecting a Yamal cleave. And it's, again, I think, and rather I'm confirming the trajectory on the back of the quality of the portfolio, as well as, I would say, the pipeline of opportunities that will join the portfolio in the coming months and knowing what is the culture of the company, in terms of what are the minimum requirements for a project or a service to make it into our backlog.
Operator
The next question is from the line of Kate O'Sullivan from Citi.
Kate O'Sullivan
The first is in relation to Russia. Could you provide us with some additional color on how the April 8 sanctions are going to impact your operations there and collection of revenue, if you have any at this point?
And just secondly, on your financial framework, how should we think about it in relation to the S&P rating downgrades and any steps that you will take to remedy the downgrade?
Arnaud Pieton
I'll take the first one before handing over to Bruno. In terms of Russia, first of all, today, the project is not suspended nor is it directly under sanction as such – or wasn't during Q1, I would say.
But, obviously, the European sanctions now target LNG goods and technology and services more directly, I would say, making the execution of the project, I would say, more complicated, maybe even highly complicated. And that's why we are being particularly prudent and cautious in relation to engaging into more spending.
Now it's a question of clarifications we get from the EU which, depending on the interpretation of the fifth package, which was the April 8 package, could significantly reduce our involvement beyond Q2. So, we have been working towards an orderly handover of the project to our clients.
Things are going to be obviously more complicated, likely, beyond Q2. But we're providing as much transparency as we can at this stage.
And there are many privileged conversations we're having with our clients and partners. But it's true that, while we will always fulfill our obligations, now the sanctions are such that it's going to make it, I would say, more difficult to progress the project, as we have done despite the challenges in Q1.
And it's going to be more challenging to deliver beyond Q2. So, that's how you should think about Arctic LNG 2 project.
Again, we will continue to operate if and as we can, always in full compliance with the sanctions. The scope is, I would say, somewhat complex.
There are two potential scenarios. And I'll hand over to Bruno after that because I think it's important that we provide the full transparency on the matter.
We have enforceable contractual obligations, but we also have contractual rights. And it's important that we fulfill our obligations in order to protect our rights.
So, I see here two potential scenarios. One is no further sanctions targeting LNG, means we have package five of sanctions, and no further sanctions targeting LNG or targeting the client, Novatek more directly.
In this case, there could be a way for the client to complete or partially complete the first train. Trains two and three are, as you know, much less advanced and, for sure, it will be clearly more challenging.
It could be that some performance obligations would be allowed to be confirmed and some won't be allowed post Q2, for sure. So, we are discussing all these in details with the customer to see what can or cannot be done, while working towards an orderly handover.
Now, if there are new trains of sanctions that are, I would say, more pointed maybe and further sanctions, they could very well bring the whole thing to a full stop for us in terms of our involvement. But for now, we are addressing and we are assessing as per the fifth package of the sanctions which were released on April 8.
Bruno Vibert
On the downgrade from S&P, first, I would like to come to the fact that it has no impact on our operations, on costs. So very, very marginal consequence of this move from S&P.
Now, how does it evolve? Of course, our capital structure still remains very strong at the back of 15 months of positive cash flows, the €3.9 billion of cash and reduction in debt and leverage over the last five quarters.
Going forward, I think two main drivers. As Arnaud mentioned, a lot of good pipeline of opportunities.
As these opportunities will manifest to new order intake to backlog growth, keeping our sale activity principle, of course, this will be one of the components for the business risk profile of S&P assessment. Second item, which I think is also very important, through the growth of TPS, through the growth of other, let's say, markets, like hydrogen, like carbon capture, like sustainable chemistry, we will have a diversification to some extent of our activities and less dependent on one geographical area or one or two projects only.
And of course, these will also contribute to the business risk profile that agencies like S&P could do. So, these will also play out for the future, maybe in a second step.
But I think both will contribute to be able to, let's say, restore margin, although at BBB- investment grade, we're still very comfortable to carry out our operations.
Operator
The next question is from the line of Mick Pickup from Barclays.
Mick Pickup
A couple questions, if I may. You mentioned a few times about the pipeline.
Can you just talk about potential timing of the pipeline and what your competitors [indiscernible] think it's a back end of 2022 event into 2023 before we start seeing major moves on contracts. So, just about the timing.
And secondly, you mentioned in your prepared remarks, discipline and quality on projects and potential delays to FID. I wonder if you could just give us a bit more color on what's in the market that you're not liking at this point in time?
Arnaud Pieton
I start with your first question. So, in terms of the calendarization of the pipelines, first of all, the pipeline is rich and there's no shortage of opportunities for Technip Energies in LNG and beyond LNG, I will say that actually 2022 will likely be about something else than LNG in terms of the large project awards.
I think on LNG, we will see in 2022, some FEED activity kicking off that will convert into FID in 2023. So, I think the pipeline is particularly rich in LNG.
But for me, the way I see it, it's more for Q1, Q2 award for more LNG capacity than into the 2022 year. 2022, we are working on paving the road towards those FIDs that will materialize into Q1 and maybe into Q2 as well.
So, it's 2023. So LNG is I would say – there's a lot of activity as we are organizing ourselves and our clients are organizing so as to reach FID.
I would say, okay, we feel – they control FID, but I would say more into Q1 and Q2 next year. For the rest of 2022, the pipeline is rich, as I said, and we will see the conversion happening likely in Q3 and Q4 in terms of the large award.
There will be many awards in Q2, but more in the areas of TPS, so Technology, Products & Services. I think there is no shortage of pipeline there in Q2 and for the rest of the year, but in Q2 will be mainly again about TPS.
And the Projects Delivery, we should see conversion into Q3 and Q4. In the area of gas, there are gas projects in Qatar beyond LNG for which we're competing and in other areas in Qatar as well.
But also, in the areas of ethylene, in the areas of carbon capture as well and renewable diesel, so the pipeline is very diverse for 2022. Yes, less large LNG, but again, we're organizing for LNG in Q1 and Q2 next year, but in the meantime, it's, I would say, different themes.
And very interestingly, a lot of good things are related to energy transition. As for the second follow-up of your question, can you maybe just repeat?
Mick Pickup
You mentioned being disciplined and going for quality contracts, but you also mentioned FID slipping in an inflationary environment. So, I'm just wondering what you think the competitive landscape is like and whether you do worry that project FIDs will slip further as pricing and bids come in.
Arnaud Pieton
If I speak for a minute about inflation because I think it's an important topic, which may come later. So the inflation is affecting more the prospects than the ongoing portfolio of projects.
So, the last month have been quite a testing period in terms of being able to make prices for our customers, given the volatility. And for a period, we were not always able to provide a firm price to our customers.
Our vendors were unable to provide firm price to us. So, it was very much about taking a deep breath and to let, I would say, the peak pass in terms of the spike in commodity prices to pass by.
It's now lower. It's, of course, not back to where it was pre-spike.
We are now back into a position where the vendors can provide us with the price and we are able to provide our customers with a price. I think some of our clients have had to take a bit of a deep breath as well to reassess their portfolio.
But what is very encouraging from the conversations we're having with them is, first of all, our ability to now provide them with firm prices, and the confirmation we are receiving from our clients that those projects which are strategic for them, and to them, they don't change, they remain strategic, and therefore, FID will be reached. So, I think there was maybe a bit – the need for a bit of a pause.
But we believe that, in the future month to come and quarters, we will see more projects, adding momentum after a slow start of the year. So from that standpoint, we are quite positive.
Operator
The next question is from the line of Jean-Luc Romain at CIC Market Solutions.
Jean-Luc Romain
I have a question on Russia, please. You mentioned in your full-year publication that your expected turnover for 2022 was €1.4 billion.
You took for €440 million in the first quarter. And my understanding is you could still work on the second quarter quite correctly, but not much more given the sanctions, which apply from 17th of September, if I understand correctly, with your sanctions regime?
Could you update us on what you expect to book until the end of the year, given the sanctions and what has already been booked?
Arnaud Pieton
Maybe let me clarify a few things. In a normal year, without the war in Ukraine, indeed, the Arctic LNG 2 project would have represented €1.4 billion of revenue for the full year 2022.
You rightly said that we've secured and booked €440 million of revenue into Q1. Now, I'm going to come back to what I said a bit earlier.
The latest train of sanctions from the EU are making it, I would say, a lot more difficult for us to envisage a normal execution of the project in Q2 and beyond. So, it is, I would say, unlikely that we will see, I would say, a full quarter in Q2 and I don't think you should assume a Q2 that looks like a Q1.
I think that would be a prudent assumption. And then, beyond Q2, things would become probably a lot more difficult because here what I – if you pay attention to what I said earlier, the project is composed of three LNG trains, train one, train two, train three.
Train one is well advanced. And it could be, I'm using words of caution because I may be proven wrong tomorrow, but it could be that there is a way for the client to complete or partially complete train one, but train two and train three for which the modules are still in China for which there has been a lot less shipments into Russia, some of the performance may not be able to happen in a way it happened for train one, I would say.
It's likely that it's not going to be able to progress in the same way. And this is why I also stated that we were very particularly prudent in the way in our spending because we need to think about multiple scenarios.
And if it's about handing over to the client, it is important that we don't engage Technip too deep and Technip Energies too deep and too far into the project. So, in short, a full Q1, likely a partial Q2 and then beyond that, have to assume that we can have anything done in Q3 and Q4.
Operator
[Operator Instructions]. The next question is from the line of James Thompson from J.P.
Morgan.
James Thompson
I want to sort of follow up from Mick's question, if that's all right. Obviously, projects, trailing 12 month book-to-bill is now down at around 0.5 times .
Appreciate that sort of a second half weighted outlook for new awards and things like that. And you clearly talked about some of the volatility and variances in the market, as we see at the moment.
So, I guess just sort of following on from that, I'm kind of interested to understand a little bit about the timeline to deliver some of the sort of more modular LNG units into US. You've kind of outlined significant amount of growth there.
It'd be quite good to understand how quickly you can turn those around from sort of bid to delivery. And within that, are you now starting to take into account any kind of schedule extension perhaps due to the lockdowns we're facing in China at this point in time.
So, a little bit about sort of delivery on those modules would be great. And then, the second question would just be, can you just remind us what the NCL component for Yamal is in 2022?
Arnaud Pieton
Bruno will start with Yamal and I'll take your question about more LNG modules.
Bruno Vibert
On Yamal, as you know, we closed the year 2021 with €166 million of NCL for our proportionate share. As we previously said, we expect to have the completion of Yamal and the warranty period during the course of 2022, so that we would complete basically our performance mitigation by the end of 2022 and nothing beyond that.
So, you would expect to have over the, let's say, the course of the year for Yamal some contribution to the P&L. Of course, it's a project, so [indiscernible] basis, but some contribution throughout the year and then ending the year with no further NCL by the end of the 2022 year.
Arnaud Pieton
Back to the pipeline of opportunities and LNG or modularized LNG in particular. So, first of all, some of the solutions that we are providing to our clients, I would say, are proprietary to Technip Energies and I have SnapLNG in mind in particular.
What I would like to share with you on the matter is that you have to expect that we are, I would say, because of the nature of the solution, this is a solution that we have progressed as a company, Technip Energies, in terms of the FEED, the progress in the engineering, the material takeoffs, all the deliverables that we would typically give to a customer. So, we have undertaken as a company to actually advance all that regardless of having clear picture of FIDs timing and all location.
We do believe in the viability of the solutions, so much so that we have indeed embarked into progressing that solution and the engineering related to the solution, as I would say, an investment for us and into – an investment to support our future customers, in particular in North America, but also beyond. I do believe and we do believe in the return of the energy investment cycle.
And it was important for us to be prepared with, I would say, a solution around LNG that is more productized and therefore more ready for consumption by and for the clients in North America in particular. So, the compression in terms of the time to market and first drop will happen through an accelerated FEED because, I would say, most of the engineering or a lot of the engineering would have been undertaken by Technip Energies as part of the development of the solution that we are offering.
That's point number one. Then in terms of the module fabrication, yes, indeed, there is, at the moment, a situation in China with COVID that is, I would say, certainly not ideal.
And we are monitoring it, we are experiencing it because we have people in China, so we know firsthand what is going on. The modules for the modular LNG could be a manufacturer in China, but it's not the only area.
And we have all our solutions there as well – in Asia and beyond Asia. And by the time we are ready to place a PO for the modules, I would say, we will probably see a bit more clearly what's happening in China because, again, we won't place a PO for modules fabrication before the FID is reached.
And we said that FID for more LNG is likely to happen into Q1 and Q2 next year. But, yeah, we're certainly monitoring.
But the compression and the time to market can happen. Again, we're not going to shave two years necessarily, but we will be shaving time on the FEED, we will be able to shave time on the PO placement, placing the purchase orders for the long leads because thanks to FEED work that is well progressed, we can place POs and commitments earlier.
Also, because we are engaging with our partners, construction partners, but also equipment supplier partners into the productized solution for modular LNG for North America. But it's totally applicable beyond North America as well.
It's very relevant to North America because we want to do without stick building there. But it's absolutely pertinent to other markets.
Operator
And there are no further questions at this time. So I'll hand the conference back to the speakers.
Phillip Lindsay
Thank you, Sarah. That concludes today's call.
Please contact the IR team with any follow-up questions. Thank you and goodbye.
Operator
Thank you. That does conclude the conference for today.
Thank you for your participation and you may now disconnect.