TotalEnergies, the French oil giant, exceeded fourth-quarter earnings forecasts, as robust gas trading profits helped counterbalance the impact of lower oil prices and weaker fuel demand. The company reported adjusted net income of $4.4 billion for the final quarter of 2024. While this represents a 15% decrease compared to the $5.2 billion earned in the same period last year, it slightly surpassed the third quarter’s $4.1 billion and beat analyst expectations of $4.2 billion.
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Strong Gas Trading Offsets Refining Weakness
TotalEnergies attributed its better-than-expected performance to strong trading results in its integrated LNG division. Increased market volatility allowed the company’s traders to capitalize on opportunities, boosting earnings in this segment by 35% to $1.4 billion. This performance helped offset the challenges posed by the downturn in refining margins, a trend affecting the entire industry.
Dividend Increase and Share Buybacks Announced
Despite the challenging market conditions, TotalEnergies announced a 7% increase in its 2024 dividend to 3.22 euros per share. Furthermore, the company confirmed its commitment to share buybacks, maintaining a target of $2 billion per quarter for 2025. This move signals confidence in the company’s future prospects and its ability to generate strong cash flow. RBC analyst Biraj Borkhataria noted that the dividend growth exceeded expectations and that the reported 8% gearing should alleviate concerns about debt levels.
Navigating a Challenging Market Environment
The global oil and gas industry is currently grappling with reduced economic activity and increased competition from new refineries in Africa and Asia. These factors contributed to a significant decline in refining margins last year, a trend projected to continue in 2025. TotalEnergies’ European refining margin for the fourth quarter was $25.90 per metric ton, a sharp drop from the $50.10 realized in late 2023. This decline coincides with a nearly $10 per barrel decrease in crude oil prices compared to the previous year. Other major oil companies, including Shell, Chevron, and ExxonMobil, also reported fourth-quarter earnings impacted by the downturn in refining margins.
Positive Outlook for 2025
Looking ahead, TotalEnergies expressed optimism for early 2025, anticipating higher gas prices, increased upstream production, and stronger power sales. CEO Patrick Pouyanne affirmed the company’s commitment to investing in renewable energy in the U.S. and highlighted the expected doubling of U.S. LNG exports in the coming years. As the largest U.S. LNG exporter with over 10 million tons under contract, TotalEnergies is well-positioned to benefit from this growth. The company’s strong performance in gas trading, coupled with its positive outlook for 2025, suggests its resilience in navigating the current market challenges.
In conclusion, TotalEnergies’ fourth-quarter results demonstrate the company’s ability to adapt to a volatile market environment. While refining margins remain under pressure, the strength of its gas trading operations and its strategic positioning in the LNG market provide a foundation for continued growth. The company’s commitment to increasing shareholder returns through dividend increases and share buybacks further reinforces its positive outlook for the future.
