Following an extremely healthy Q1 for bookings (see Exceptional bookings growth), Fluence has announced another large custom engineered solution (CES) win. We make no changes to our estimates at this point, but the win should improve confidence that FY19 figures are achievable.
Fluence has secured a $10m CES desalination contract from a large global steel producer in Brazil. Construction is due to begin in Q219 and the plant is expected to be fully operational by Q420. On completion, the plant will have the capacity to process 12,000m3 of seawater per day (the largest in Brazil) but will be able to treble capacity if needed. Reference to a repeat customer suggests the client is ArcelorMittal.
This win represents a further success for Fluence’s CES business, having already secured large contract wins this year in Ivory Coast and Egypt ($188m and $20m respectively). As we expect only c $4m of the contract value to be recognised as revenue in FY19, we make no changes to our numbers at this point. However, it does increase our confidence that these forecasts will be achieved. In Exceptional bookings growth (published on 2 May 2019), we highlighted that visibility on 88% of our $152m FY19 revenue forecast was underpinned by existing bookings and company guidance that Smart Product Solutions revenues will at least double. This win raises that coverage to 91% and suggests the company needs to generate just $14m from new business in the remainder of FY19.