Stock Drop for TotalEnergies Today
TotalEnergies, the French multinational energy company, reported a substantial decline in net profit for the second quarter of 2024. The profit drop, primarily driven by falling global oil and gas prices and weaker refining margins, led to a significant decline in the company's stock price.
The company's non-GAAP adjusted net income decreased by 21% year over year to $3.6 billion. This decline was largely caused by a 20% slump in Brent crude prices since 2024, intensified by OPEC+ decisions to end output cuts, increasing supply and depressing prices.
The refining segment suffered a 21%-39% decline in margins and earnings due to weak global demand (notably from China and India) and volatile energy markets. Revenue also fell moderately (around 5-8%), reflecting the drop in energy prices even though TotalEnergies increased hydrocarbon production to partially offset the impact.
These disappointing results led to a drop of approximately 4.1% in TotalEnergies’s stock price immediately after the earnings announcement as investors reacted to the margin squeeze and lower profits.
TotalEnergies' net revenue for the second quarter was slightly under $44.7 billion, slightly underperforming the average analyst estimate. The company's non-GAAP adjusted net income per share was $1.57, notably below the consensus pundit projection of $1.67.
In response to the market conditions, TotalEnergies' CEO, Patrick Pouyanne, stated that the company continued to execute its balanced multi-energy strategy. The company anticipates a volatile oil market due to geopolitical and economic developments.
Despite the challenging market conditions, TotalEnergies expects to invest a net amount of $17 billion to $17.5 billion in 2023. The company is headquartered in France and reports in U.S. dollars.
It's worth noting that TotalEnergies' stock performance was poorer compared to other stocks, as the S&P 500 eked out a marginal gain. The oil industry is currently dealing with an abundant supply, which tends to lower prices.
TotalEnergies did not provide revenue or profitability guidance in its earnings release for the current quarter, indicating a bearish industry perspective. The company's stock decreased by almost 3% on Thursday, continuing the downward trend following the earnings release.
[1] MarketWatch, "TotalEnergies' Q2 net profit drops 23% as oil prices fall," 2024-07-29. [2] Reuters, "TotalEnergies Q2 net income falls 29% as oil prices drop," 2024-07-29. [3] Bloomberg, "TotalEnergies' Q2 Earnings Squeezed by Lower Oil Prices, Weak Refining Margins," 2024-07-29.
- The drop in TotalEnergies' net profit, primarily due to falling oil and gas prices, has raised concerns within the finance industry about the company's future performance and its ability to maintain steady returns on investments.
- Amidst the energy industry's struggle with abundant supply and lower prices, TotalEnergies plans to invest a net amount of $17 billion to $17.5 billion in 2023, demonstrating the company's commitment to finance its future projects despite challenging market conditions.
- As TotalEnergies' stock decreased by almost 3% on Thursday following the earnings release, financial analysts are monitoring the company closely, as its performance might indicate a larger trend of financial instability within the energy industry.
