(Paris) The fourth oil and gas major TotalEnergies ended the second quarter with a 7% drop in its profit, to 3.8 billion euros, below analysts’ forecasts, suffering from a sharp drop in refining margins and a decline in sales and gas prices.
Over the first half of the year, TotalEnergies posted a net profit of $9.5 billion, a slight decline of 1% over the year, after a first quarter of $5.7 billion, according to the press release published on Thursday by the group, which had recorded record profits in 2022 and 2023.
Analysts on average had expected quarterly net profit of $4.9 billion, according to the consensus calculated by FactSet and Bloomberg.
Between April and June, over one year, the group’s operating performance (adjusted net operating profit) fell by 13% in its priority liquefied gas (LNG) business, “in a context of lower demand” in Europe and falling prices.
The group is even more penalized in its refining-chemicals segment (-36%), which suffered from the “drop in refining margins” mainly in Europe and the Middle East, the group explained.
On the other hand, the group is progressing in its core exploration-production division (+14%) thanks to sustained oil prices and in its electricity branch which covers renewable energies (+12%).
In the end, adjusted half-year net profit (excluding exceptional items) – the indicator most closely followed by analysts – fell by 15% to $9.8 billion. As for EBITDA (an indicator that measures profitability), it shows a drop of 11% over one year, to $22.6 billion.
“TotalEnergies’ results fell short of consensus expectations, with weakness in refining and chemicals and rising corporate costs driving the gap,” RBC bank said in a note.
Despite signs of weakness, the group remains confident. “TotalEnergies generated robust financial results in the second quarter,” said group CEO Patrick Pouyanné in a press release.
The latter was renewed in May for a 4e mandate to implement “the balanced transition strategy presented to shareholders in September 2023” – oil and gas on the one hand, and decarbonized energies on the other.
5 billion for electricity in 2024
Over the half-year, the group, which has been heavily criticised for pursuing its activities in fossil fuels which warm the atmosphere, launched several projects “which support the objective of 2-3%/year growth in production” of oil and gas, in Angola, Brazil, Oman and Nigeria.
At the same time, the group is diversifying and has made acquisitions to strengthen its position in electricity, such as gas-fired power plants in Texas and the United Kingdom, offshore wind farm concessions and battery storage sites in Germany.
TotalEnergies has confirmed a level of net investments of 17 to 18 billion dollars in 2024, including 5 dedicated to electricity.
“Reinforced by these solid results in line with the objectives for the year 2024”, the board of directors decided “to maintain the second interim dividend for the financial year 2024 in the amount of 0.79 euros per share” (+7% compared to 2023), “and authorized share buybacks of up to 2 billion dollars in the third quarter of 2024”, the group indicated.
The oil giant pocketed a record profit of $21.4 billion in 2023 and $20.5 billion in 2022, a year boosted by the record surge in hydrocarbon prices.
Oil prices, which retreated from 2022 highs at the start of Russia’s invasion of Ukraine, rebounded after the Hamas attack in southern Israel on October 7 and are currently holding steady above $80 a barrel.
Gas prices, on the other hand, have plunged since their record highs at the start of the conflict in Ukraine, currently standing at around 30 euros per megawatt hour according to the Dutch TTF benchmark, down 40% year-on-year.