TotalEnergies’ Profit Slumps by 21% in 2024, But Promises $2 Billion Quarterly Buybacks in 2025

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TotalEnergies Posts 21% Profit Drop in 2024 But Plans Strong Buybacks in 2025

In a year marked by fluctuating oil prices and weaker fuel demand, TotalEnergies has posted a significant drop in profits for 2024, but the French energy giant is setting its sights on a brighter future with plans for large share buybacks.

2024 Profit Decline: TotalEnergies’ Tough Year

TotalEnergies announced that its adjusted net income for 2024 was $18.3 billion, a 21% drop from $23.2 billion the previous year. This decline comes as global oil prices fell and fuel demand remained weak, putting a damper on profits for major energy companies like TotalEnergies.

Despite the disappointing figures, the company’s performance was in line with analysts’ expectations. They had predicted a net income of $18.2 billion for the year, according to a consensus compiled by LSEG.

Even though profits were lower than in 2023, TotalEnergies’ fourth-quarter results showed signs of recovery. The company reported an adjusted net income of $4.4 billion for the final three months of 2024, an 8% increase from the previous quarter. This improvement was mainly driven by a strong performance in its liquefied natural gas (LNG) and integrated power sectors.

Stronger Performance in Q4 Signals Optimism for the Future

While 2024 was a challenging year for TotalEnergies, the fourth quarter’s better-than-expected results provided a glimmer of hope. The company had been facing consecutive quarterly profit drops and saw its adjusted net income hit a three-year low by September 2024. However, thanks to its efforts in LNG and power production, TotalEnergies managed to finish the year on a positive note.

The company’s improved performance in Q4 reflects a slight increase in hydrocarbon production, a stronger gas trading environment, and higher refining margins, according to the company’s earlier trading update.

TotalEnergies’ diversified energy portfolio, including natural gas, renewables, and refining, helped cushion the blow from falling crude oil prices and weak fuel demand. This positive shift at the end of the year signals that the company is positioning itself well for the future despite a tough 2024.

Full-Year Financial Snapshot

Here’s a quick breakdown of TotalEnergies’ financial results for 2024:

  • Adjusted net income: $18.3 billion (down from $23.2 billion in 2023, a 21% decline).
  • Net income: $15.8 billion (down from $21.4 billion in 2023).
  • Dividend increase: TotalEnergies raised its 2024 dividend by 7% to €3.22 per share ($3.35).

The increase in dividends comes as a positive move for shareholders, signaling that despite the drop in profits, TotalEnergies remains committed to rewarding its investors.

Looking Ahead: Bold Plans for 2025

While 2024 was a rough year, TotalEnergies is optimistic about the future. The company has announced a bold share buyback plan for 2025, aiming to repurchase $2 billion worth of shares per quarter. This is part of the company’s strategy to continue returning value to its shareholders while it navigates a volatile energy market.

In addition to the share buybacks, TotalEnergies is focusing on key growth areas, including natural gas and renewables. The company expects higher gas prices and strong hydrocarbon production in early 2025, which could help offset the impacts of weaker oil prices.

Why This Matters: TotalEnergies’ Long-Term Strategy

For investors, the $2 billion quarterly buybacks are a clear sign that TotalEnergies is confident in its ability to generate cash flow and weather global market volatility. The share buyback plan will reduce the number of shares in circulation, potentially boosting earnings per share and increasing the value of the stock for existing shareholders.

These buybacks, alongside the dividend increase, suggest that TotalEnergies is focusing on maintaining its investor-friendly image even during tougher times in the oil and gas industry. The company’s strategy to diversify its portfolio with natural gas and renewables is also seen as a move to future-proof its business and reduce reliance on the more volatile oil market.

Challenges Ahead for TotalEnergies

Despite the optimism for 2025, TotalEnergies still faces several challenges:

  1. Oil Price Volatility: The price of crude oil remains unpredictable, and any sharp downturn could once again hit profits.
  2. Weak Demand for Fuel: With global economic uncertainty, demand for fuel could remain weak, particularly in the wake of the COVID-19 pandemic and shifting energy consumption patterns.
  3. Geopolitical Tensions: Ongoing tensions in energy-rich regions like the Middle East and Russia’s war in Ukraine continue to impact global energy markets and supply chains.
  4. Climate Commitments: TotalEnergies is also under pressure to meet its environmental goals, particularly as governments around the world ramp up efforts to combat climate change.

In the face of these challenges, TotalEnergies is positioning itself as a more diversified energy player, focusing on natural gas, renewable energy, and power production to balance out its more traditional oil and gas business.

Conclusion: A Mixed Year with Optimism for 2025

TotalEnergies’ 2024 earnings show the impact of lower oil prices and weaker fuel demand, but the company remains optimistic about the future. The 21% drop in profits was largely due to external factors, and the company’s fourth-quarter recovery highlights the potential for growth moving forward.

By focusing on share buybacks, increased dividends, and expanding its gas and renewable energy operations, TotalEnergies is setting itself up for a strong year ahead. However, it will need to continue navigating global market challenges and focus on maintaining steady growth to achieve long-term success.

For investors, TotalEnergies’ commitment to returning value through buybacks and dividends makes it an attractive option, even amid a volatile energy market. Whether it can sustain this momentum through 2025 remains to be seen, but for now, TotalEnergies seems ready to weather the storm and come out stronger.

By aparna

I am Aparna Sahu Investment Specialist and Financial Writer With 2 years of experience in the financial sector, Aparna  brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna  has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna  holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.

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