TotalEnergies Boosts Share Buyback as Profit Jumps Threefold
TotalEnergies Boosts Share Buyback as Profit Jumps Threefold
(Bloomberg) -- TotalEnergies SE posted a threefold increase in first-quarter adjusted profit and expanded its share buybacks after Russia’s invasion of Ukraine sent energy prices soaring.
As the French energy giant’s operations churned out cash, it nevertheless absorbed some financial damage from the Russia crisis. The company took a $4.1 billion writedown largely tied to a gas project in the country that looks likely to be hindered by European Union sanctions.
“The rebound in energy prices seen since the second half of 2021 amplified after Russia’s military aggression against Ukraine,” TotalEnergies’ Chief Executive Officer Patrick Pouyanne said in a statement on Thursday.
First-quarter adjusted net income, which excludes the writedown, rose to $8.98 billion, the company based near Paris said. That beat the average analyst estimate of $7.31 billion. The firm now plans to buy back as much as $3 billion of shares in the first half, up from $2 billion previously. It confirmed that its interim dividend for 2022 will rise by 5% to 69 euro cents ($0.73).
“The increase in the dividend and the ramp-up of buybacks are reassuring,” said Ahmed Ben Salem, an analyst at Oddo BHF. The better-than-expected results came from “a good performance” in liquefied natural gas, a rebound in refining margins, and “a good operational momentum,” he said.
Shares of the company traded 2.1% higher by 9:33 a.m. in Paris, taking this year’s gain to 3.3%. The company has been trailing peers amid concern about its exposure to Russia.
TotalEnergies kicks off a reporting season that should look similar for most of the major international oil companies -- with multibillion-dollar impairments on Russian assets offset by gains from the sharp rise in energy prices. Crucially for investors, the five supermajors could be on track to post the highest free cash flow in 14 years, underpinning the companies’ promises to boost returns.
LNG Sales
While Total’s hydrocarbon production fell 1% from a year earlier, its sales of LNG rose 34% as European nations scrambled to buy more of the super-chilled fuel to replenish their stockpiles amid concerns over supplies from Russia.
The French company pointed out the strong performance of its gas, LNG and electricity trading activities. Profits at the company’s refining and chemicals division more than quadrupled in the last quarter as Europe trimmed imports of Russian oil products.
TotalEnergies said it expects oil and gas prices to remain high in the coming months, with a potential drop in Russian crude production of 2 million to 3 million barrels a day and lower exports of refined fuels from the country.
Major oil companies have been under pressure to expand output to help fill this gap created by the Russia crisis. TotalEnergies said it would be “mobilizing additional investments to support short-term gas production in the North Sea.” Net investments will trend toward $15 billion this year -- up from $13.3 billion last year -- a quarter of which will go into renewables and electricity.
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