TotalEnergies, the world’s fourth-largest oil and gas company, ended the second quarter with a 7% fall in net income to 3.8 billion euros.
This decline was due to lower refining margins and lower gas sales and prices, leading to results below analysts’ forecasts.
First-half net income came to $9.5 billion, down slightly by 1% on the previous year.
Analyst expectations, based on the FactSet and Bloomberg consensus, were for a quarterly profit of $4.9 billion, which was not achieved.
Lower margins and operating performance
TotalEnergies was impacted by lower refining margins and a declining operating performance in the priority liquefied natural gas (LNG) sector, particularly in Europe, where demand declined.
RBC Bank described the results as “disappointing”, due to weakness in refining and chemicals, as well as rising corporate costs.
Despite a 15% drop in adjusted half-year net profit (excluding exceptional items), TotalEnergies remains confident and is proposing a second interim dividend of 0.79 euros, up 7% on 2023.
In addition, share buybacks of up to $2 billion have been authorized for the third quarter.
Transition strategy and investments
CEO Patrick Pouyanné, reappointed for a fourth term, reaffirms the Group’s commitment to a “balanced transition strategy”, combining oil, gas and renewable electricity.
TotalEnergies forecasts net investments of $17 to $18 billion by 2024, including $5 billion dedicated to electricity.
Pouyanné had suggested moving the group’s main listing to New York, in the face of European investors’ reluctance.
A French Senate committee then proposed a “golden share” to enable the French government to monitor shareholder developments, a proposal rejected by Pouyanné on legal grounds.
Projects and diversification
Despite criticism of its fossil fuel activities, TotalEnergies is pursuing several oil and gas production growth projects in Angola, Brazil, Oman and Nigeria.
At the same time, the Group is diversifying into electricity, with recent acquisitions of gas-fired power plants in Texas and the UK, as well as wind and battery storage projects in Germany.
TotalEnergies has forecast record profits of $21.4 billion in 2023 and $20.5 billion in 2022, years marked by soaring hydrocarbon prices following the Russian invasion of Ukraine.
While oil prices remain above $80 a barrel, gas prices have plummeted to around 30 euros per megawatt-hour, down 40% year-on-year.
TotalEnergies’ financial and operational strategies, despite the current challenges, demonstrate its ability to adapt and navigate in a changing energy environment.
The Group continues to juggle its commitment to fossil fuels and its transition to more sustainable energy sources, while ensuring attractive returns for its shareholders.
