TotalEnergies CEO seeks to reassure investors after smaller profit, higher debt

By America Hernandez

PARIS - Europe's willingness to buy more liquefied natural gas (LNG) from the U.S. to plug a trade gap will boost business for TotalEnergies , said CEO Patrick Pouyanne on Wednesday, after the company posted first quarter earnings down across all business segments except its LNG unit.

The French oil major is the top exporter of U.S. LNG, with its portfolio set to grow this decade, most recently via a 20-year contract signed this month with NextDecade.

Earlier this month U.S. President Donald Trump urged European countries to buy more American oil and gas to avoid being hit with tariffs, with European Union officials saying more U.S. LNG purchases would be needed.

TotalEnergies shares fell more than 3% after its first quarter earnings, mostly due to a 42% rise in net debt and 18% drop in adjusted net profit to $4.2 billion.

Analysts had expected $4.3 billion net profit, according to an LSEG poll.

The CEO defended the decision to borrow in order to maintain share buybacks of up to $2 billion in the second quarter and boost dividends, even as Brent crude prices fall below $70 per barrel this month.

"At the board level we are convinced of the sound fundamentals of the business...and so we think that the best signal we can send investors is consistency rather than just making short-term reactions," he told analysts.

Debt hit $20.1 billion, up from $10.9 billion in the fourth quarter of 2024, due to seasonally higher working capital needs that would reverse later this year, TotalEnergies said.

However, "even on a pre-working capital, organic basis, free cash flow was $2.5 billion, insufficient to cover both dividends and buybacks", wrote Jefferies analyst Giacomo Romeo in a note.

Integrated LNG earnings were up 6% year-on-year, while the renewables and electricity business was down 17%.

TotalEnergies has postponed approval of a 600-megawatt project in the U.S. because tariffs on imported Indian solar panels made it less profitable, Pouyanne said.

Despite boosting oil and gas production 4% from a year ago, upstream profits fell 6% due to lower oil prices.

Total is preparing to re-launch its Mozambique LNG project by mid-2025, Pouyanne said, with partners prepared to finance the outstanding amount with equity should credit export agencies back out.

Income from TotalEnergies' refining and chemicals segment was down 69% from the same period last year, as weak demand and new competition from Asian and African refineries keep profits margins on refining fuels in Europe down to 59% lower than a year ago.

British peer BP this week reported a 48% profit drop on weaker refining and natural gas trading, while Portugal's Galp posted a 29% drop.

Unlike BP, Shell and Equinor, TotalEnergies has continued increasing renewable energy holdings as it grows its oil and gas business and said several minority stake sales in green assets in the second quarter will boost cash.

(Reporting by America Hernandez in Paris. Editing by Aidan Lewis, Mark Potter and Elaine Hardcastle)