Better than expected sales but no signs of margin recovery Sales, while slightly better than expected, barely improved versus Q1 21 (+1.3%), although there was some improvement on the last three quarters of 2021. Reported EBIT remains weak at EUR7m (0.9% EBIT margin), with underlying profitability also remaining at a low level. The company reported an additional COVID impact of EUR5m in EBIT. Good orders and backlog Tecnicas Reunidas reported good data in terms of order intake. The figure was EUR632m in Q1 but increasing to EUR1.2bn YTD as a result of the ethylene contracts in Europe (Ineos) and the sulphur facilities in Qatar (Qatargas). Backlog has increased up to EUR10.4bn in Q1 (EUR10.9bn YTD). The company expects order intake to be above EUR4bn in the year. Net debt... the devil is in the detail Tecnicas reported net cash of EUR61m, better than the net debt figure of cEUR40m expected by consensus. However, the company does not account the participative loan from Sepi as debt but rather as equity. Including the EUR175m participative loan, Net Debt in the quarter would have been EUR114m, EUR40m above FY21 and above consensus expectations. Gross operating cash flow is close to zero according to our calculation, with an increase in working capital of EUR23m. This pattern, according to the company, will be maintained in Q2 and improve in H2 22. Outlook reiterated... we need to see a turnaround in margin to become more constructive The outlook is reiterated with total sales of c.EUR4bn in the year, EBIT margin at 2%, despite the crisis in Ukraine could impact negatively raw material prices and supply chain disruption. We maintain our estimates, which are slightly below the company''s EBIT margin 2022 guidance (1.9%e vs 2.0% guided). We think these results give little reason to consensus to lift estimates.