TotalEnergies Q3 2024 Earnings Report

TotalEnergies (TTE) announced its third-quarter earnings for 2024, demonstrating resilience with an adjusted net income of $4.1 billion despite a challenging market environment. During the earnings call, led by CEO Patrick Pouyanné and CFO Jean-Pierre Sbraire, it was revealed that the company achieved a total adjusted net income of $13.9 billion over the first nine months of the year. Although European refining margins declined significantly and Brent crude prices fell, the company's return on average capital employed remained strong at 14.6%. Furthermore, TotalEnergies reaffirmed its commitment to shareholder returns with an increased dividend and an extensive share buyback program.

Key Takeaways

• Adjusted net income for Q3 is $4.1 billion, totaling $13.9 billion for the first nine months.
• Hydrocarbon production within guidance range; Q4 expectations are between 2.4 and 2.45 million barrels per day.
• Integrated LNG and Power segments performed well, generating respective adjusted net operating incomes of $1.1 billion and $0.5 billion for Q3.
• Plans for $2 billion in share buybacks in Q1 2024 and an overall goal of $8 billion for the year.
• Third interim dividends increased by nearly 77% compared to 2023 levels.
• New projects in Suriname and Uganda are on track for production commencement by mid-2026.

Company Outlook

• TotalEnergies aims for 3% annual production growth through 2030.
• Net investment guidance for 2024 set at $16 billion to $18 billion.
• The company is monitoring developments in Mozambique, with plans to resume operations when security improves.

Challenges and Opportunities

Bearish Highlights

• European refining margins dropped by 66%.
• Brent crude prices fell 5% to $80 per barrel.
• Supply surplus in the refining sector coupled with weak industrial demand in Europe.
• Issues in monetizing gas discoveries in South Africa and impacts from SunPower's bankruptcy.

Bullish Highlights

• Strong performance in Integrated LNG and Power sectors.
• Positive news from Uganda and Suriname projects.
• Expected cash flow of approximately $30 billion by year-end.

Financial Adjustments

• TotalEnergies recorded a $1 billion asset write-off primarily linked to SunPower's bankruptcy.
• Integrated Power's return on average capital employed dipped below 10%.
• Lower margins in the Chemicals segment owing to increased supply.

Q&A Highlights

• The company remains cautiously optimistic regarding the restructuring of European refineries and transitions to biorefineries.
• TotalEnergies does not plan economic run cuts as current refining margins cover variable costs.
• Discussions surrounding regulatory changes impacting the biofuel market in Europe are ongoing.
• The execution of an additional $2 billion CapEx is conditional on oil prices stabilizing above $70 per barrel.

Overall, TotalEnergies has shown robust performance in Q3 2024, focusing on strong shareholder returns and strategic progress on new projects. Despite market challenges and geopolitical issues, the company's diversified portfolio positions it well for continued growth.

InvestingPro Insights

InvestingPro emphasizes TotalEnergies' strong performance amidst market challenges, noting a low P/E ratio of 6.9 compared to its earnings growth potential. The company has consistently maintained dividend payments for 48 years, with a dividend yield of 4.07% and a growth rate of 8.92% over the last twelve months.

Full Transcript Summary

The earnings call, with contributions from CEO Patrick Pouyanné and CFO Jean-Pierre Sbraire, highlighted the company's financial resilience and strategic focus amid a tough market. Key updates on production, dividends, and future strategies were discussed, affirming TotalEnergies' commitment to shareholder value and sustainable growth.