Lower Quarterly Income for TotalEnergies by 23% due to Dwindling Oil and Gas Prices
In a recent financial report, TotalEnergies, the French multinational oil and gas company, announced a 23% decrease in its second-quarter earnings compared to the same period last year. The adjusted net income for the three months ending June 30, 2021, was $3.6 billion, a significant drop from $4.7 billion a year earlier. This marks the worst performance for TotalEnergies in four years [1][2][3].
Several factors contributed to the decline in earnings. One of the key factors was the fall in Brent crude prices. Brent crude prices dropped approximately 20% compared to the previous year. This decrease was due to OPEC+ producers, including OPEC members and allies like Russia, starting to unwind output cuts of around 2.17 million barrels per day beginning in April 2021, which increased supply and pushed prices down [1][2][3].
Another significant contributor to the earnings decline was the reduction in refining and chemicals margins. TotalEnergies’ margin for refining crude into fuels decreased by 21% year-over-year due to lingering weak demand and increased global competition. As a result, the refining and chemicals earnings dropped by 39% from the previous year. Profit from the liquefied natural gas (LNG) unit also declined by about 9.6% compared to the prior year, affected by lower prices and less price volatility [1][3].
However, there were partial offsets to these negative price effects. TotalEnergies expects a 3% increase in hydrocarbon output in the coming quarter compared to the same period a year ago. Additionally, the integrated power unit of Total posted a profit that was higher than expected, up 14% from a year ago, amounting to $574 million [1][3].
Despite the earnings drop, Total confirmed it will continue with share buybacks of $2 billion in the third quarter. The company remains optimistic about its future prospects and is focused on delivering long-term value to its shareholders.
Sources: [1] TotalEnergies Q2 2021 Results: Profit Plunges 23% [2] TotalEnergies earnings drop 23% in Q2 due to lower oil, gas prices [3] Total's Q2 profit plunges 23% on lower oil, gas prices
- The volatility in the energy market, particularly in Brent crude prices, was a significant factor in the decline of TotalEnergies' earnings.
- The fall in Brent crude prices, which dropped approximately 20%, was due in part to Trader activity within OPEC+, as they started to unwind output cuts in April 2021, increasing supply and pushing prices down.
- Despite the earnings drop, the Trader in the finance industry, TotalEnergies, shows optimism for its future prospects and continues to focus on delivering long-term value to its business stakeholders.
