TotalEnergies Q3 income hits three-year low as refining margins plunge

7:29 am Thursday, October 31st, 2024

By America Hernandez

PARIS (Reuters) -French oil major TotalEnergies reported third-quarter adjusted net income at a three-year low of $4.1 billion on Thursday, slightly missing expectations as refining margins and upstream outages dragged down earnings.

Adjusted net income was down 37% from a year earlier and 12.7% lower from the previous quarter’s $4.7 billion. The result just missed analyst expectations of $4.2 billion.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 23.6% year on year to $10 billion.

Earlier this month, TotalEnergies warned its financial results would take a hit as its margin for converting crude oil into refined fuels tumbled 65%.

Global refining margins have dropped sharply in recent months in the face of weaker economies and the start-up of several new refineries in Asia and Africa, while oil prices fell 17% in the quarter – the largest quarterly decline in a year – on worries about the global oil demand outlook.

TotalEnergies shares were down 1.5% in early trading.

RBC analyst Biraj Borkhataria said Total reported “weaker cash generation relative to expectations”, and that while “divisional estimates were broadly in line with consensus … estimates have been falling following the recent trading update.”

The company confirmed $2 billion in share buybacks for the fourth quarter and decided a third interim dividend of 0.79 euros per share for 2024.

In addition to a 83% drop in quarterly refining and chemicals division profits year-on-year, Total’s integrated LNG division also made 21% less than the third quarter last year, with the company citing low gas market volatility as a hamper on trading profits. Integrated power, which includes renewables, was down 4% from a year ago.

TotalEnergies took a $1.1 billion impairment related to the August bankruptcy filing of U.S. subsidiary SunPower, and its exit of several South African offshore blocks.

Quarterly hydrocarbon production of 2.4 million barrels of oil-equivalent per day was at the low end of guidance given at half year due to security-related disruptions in Libya and an outage at the Ichthys LNG plant in Australia.

(Reporting by America Hernandez and Benjamin Mallet in Paris; Editing by David Goodman, Mark Potter and Emelia Sithole-Matarise)