TotalEnergies' Q4 Profit Drop: A Blip or a Trend?

TotalEnergies, one of the world's leading oil and gas companies, reported a 15% drop in fourth quarter earnings, closing out a year marked by low oil prices and weak fuel demand. The company's earnings per share fell to $2.09 from $1.26 a year ago, while adjusted net income per share in euros was 2.02 euros, compared to 2.93 euros last year. Adjusted EBITDA also fell 27% from last year to $11.70 billion from $16 billion a year earlier. Despite these setbacks, TotalEnergies' gearing ratio is expected to remain below 10%, benefiting from a positive contribution of around $5 billion to working capital during the quarter, including $1.5 billion from exceptional items.



The weak oil demand can be attributed to several key drivers, including low oil prices, weak fuel demand, increased use of renewable energy, geopolitical tensions, and economic slowdown. These factors have contributed to the decline in TotalEnergies' earnings and are expected to evolve in the near to medium term, impacting the company's future earnings. However, TotalEnergies' strategic shift towards renewable energy and electricity generation has opened up new opportunities for growth in these segments.

TotalEnergies' annual report on scenarios for the global energy system presents three scenarios for the possible evolution of the demand and the global energy system up to 2050: Trends, Momentum, and Rupture. The Trends scenario reflects the current trajectory of various countries up to 2030 and anticipates technological developments and public policies in line with current trends. The Momentum scenario integrates the decarbonization strategies of NZ50 countries, as well as the NDCs (Nationally Determined Contributions) of other countries. The Rupture scenario is designed to achieve a temperature increase of less than 2°C by 2100. These scenarios highlight the opportunities for further growth in the renewable energy and electricity generation segments for TotalEnergies.



In conclusion, TotalEnergies' Q4 profit drop is a result of weak oil demand and the company's strategic shift towards renewable energy. While these factors may impact the company's future earnings, the opportunities for growth in the renewable energy and electricity generation segments remain strong. As TotalEnergies continues to adapt to the changing energy landscape, investors should monitor the company's progress and consider its long-term potential in the global energy transition.