TotalEnergies lands $9.9 billion profit as it books new Russia charge
11:12 am Thursday, October 27th, 2022
By Benjamin Mallet and Silvia Aloisi
PARIS (Reuters) – TotalEnergies posted a sharp jump in third quarter net profit on Thursday, joining other energy giants which have benefited from higher oil and gas prices, although it also booked a new writedown on its Russian assets.
The French group reported adjusted net income of $9.86 billion, which compared with $4.77 billion for the same period in 2021 and $9.8 billion in the second quarter of this year.
TotalEnergies also announced a new impairment of $3.1 billion related to Russia, adding to provisions of $7.6 billion in the first two quarters of the year for assets it owns there.
The overall Russia writedown is among the largest booked by a Western company, even though it is not as big as BP’s more than $25 billion Russian exit impairment charge.
Oil and gas prices have risen this year in the wake of Russia’s invasion of Ukraine, and Shell on Thursday reported a third-quarter profit of $9.45 billion as well as announcing plans to sharply boost its dividend by year-end.
Unlike London-based rivals BP and Shell, TotalEnergies has held on to several investments in Russia, including minority stakes in gas producer Novatek and liquefied natural gas (LNG)projects Yamal LNG and Arctic LNG 2.
Asked about the reason for the provision, a spokesman referred to comments made last month by TotalEnergies chairman and chief executive Patrick Pouyanne who told investors that it was becoming “complex” for Western groups to receive dividends from Russian joint ventures and stake holdings.
“I’m not convinced we will continue to have any flows from Russia in the months to come,” Pouyanne said at the time.
But the results on Thursday showed the group had received $748 million in dividends from Russia in the first three quarters.
Of these, $349 million were booked in the third quarter and related to the Yamal venture, while $368 million came in the second quarter from its shareholding in Novatek.
The payments came in spite of calls from advisers to Ukrainian President Volodymyr Zelenskiy, who in a Sept. 1 letter had asked Pouyanne to reject what they called “blood money” dividends from Novatek.
At its investor presentation in late September, TotalEnergies said it would increase investments and ramp up production of LNG as it laid out its strategy for a possible future without Russia, while stopping short of severing links.
Finance chief Jean-Pierre Sabre said on Thursday that after the writedowns, TotalEnergies still had around $6 billion of capital employed in Russia.
TotalEnergies, which has faced strike action by some refinery workers in France, also announced a one-off salary bonus to staff to reflect its bumper profits.
(Reporting by Benjamin Mallet and Silvia Aloisi; Editing by Sudip Kar-Gupta, Lincoln Feast, Gerry Doyle and Alexander Smith)
