Buying TechnipFMC Bonds- Issuer: TechnipFMC
- ISIN: FR0011273432
- Coupon: 4.00% in euros (payment 1 time per year)
- Repayment: June 15, 2027
- Yield to maturity: 5.46%
- Rating: BBB-
- Award: +2% for assets of similar quality
Justification of the purchase:
TechnipFMC is a leading international company operating in the oil and gas technology sector, with a focus on the development and implementation of subsea solutions for oil and gas production. Despite the challenges in the industry, such as the volatility of commodity markets, the company demonstrates sustainability and good financial results. Its leadership in innovative technologies aimed at reducing the carbon footprint underpins long-term growth prospects.
TechnipFMC's financial performance in 2024 showed positive dynamics:
- An increase in adjusted EBITDA by 47% to $379 million.
- A record order book worth $13.9 billion, which ensures revenue sustainability in the coming years.
These indicators make TechnipFMC bonds an attractive tool for investors, offering a yield of 5.46%, which is 2% higher than the average yields on similar securities.
Reasons for the discount:
TechnipFMC bonds are traded at a small discount, which is due to several factors:
1. Revenue decline in the Surface Technologies segment: In the first quarter of 2024, revenue in this segment decreased by 14% due to the sale of the Measurement Solutions division and a decrease in activity in North America.
2. Restructuring costs: The company has completed several restructuring processes, which temporarily affected profitability. Despite this, positive results from these changes are expected in the medium term.
3. Margin pressure: Margin pressure has been observed in some regions, which has led to a 70% decrease in operating profit in the Surface Technologies segment compared to the previous quarter.
Despite these short-term challenges, TechnipFMC has good growth prospects due to a significant portfolio of orders and a leading position in the underwater technology sector. Strong operational performance and stable financial results support the long-term sustainability of the company.
Conclusion:
We recommend the purchase of TechnipFMC bonds, as the current discount provides an opportunity to receive a premium of 2% to similar securities, as well as a reliable income of 5.46%.
