French oil major TotalEnergies reported a 6% fall in second-quarter earnings on Thursday, disappointing analysts who had expected flat earnings.
According to Reuters, the company’s adjusted net income for the three months ending June 30 was $4.7 billion, down from $4.96 billion a year earlier and $5.1 billion in the first quarter of 2024.
Analysts had anticipated income to remain steady at $4.96 billion, based on a consensus of estimates compiled by LSEG.
Despite the lower-than-expected earnings, TotalEnergies confirmed it would proceed with a $2 billion share buyback in the third quarter.
Biraj Borkhataria, head of global energy transition research at RBC Europe, described the results as “modestly disappointing.”
Following the earnings announcement, TotalEnergies’ shares fell by 1.7%, trading at 61.4 euros as of 0805 GMT.
The company, which primarily generates income from oil and gas production and sales, is the first Western oil major to report first-half results this year.
TotalEnergies’ earnings have decreased from the record highs seen in 2022, which were driven by a surge in energy prices following Russia’s invasion of Ukraine.
However, earnings remain above pre-pandemic levels due to ongoing demand, particularly for seaborne liquefied natural gas (LNG).
The company reported a 14% increase in income from oil production compared to the previous year, thanks to higher crude prices.
However, earnings from its refining and chemicals unit dropped by 36%, and its integrated LNG business saw a 13% decline.
TotalEnergies attributed the downturn to subdued diesel demand in Europe and lower prices as market volatility from the Russian supply disruption began to stabilize.
TotalEnergies’ average refining margin of $44.90 per metric ton was slightly higher than last year but marked a 37% decline compared to the first quarter of 2024.
The company is not alone in facing these challenges; peers BP and Exxon had also cautioned that lower refining margins and weaker gas demand would impact profits this quarter.
Despite these challenges, TotalEnergies confirmed its net investment guidance of between $17 billion and $18 billion for the year.
