TotalEnergies SE (TTE) Bundle
Understanding TotalEnergies SE (TTE) Revenue Streams
Understanding TotalEnergies SE’s Revenue Streams
Revenues from Sales: In the third quarter of 2024, revenues from sales amounted to $47,429 million, a decrease of 4% compared to $49,183 million in the second quarter of 2024. For the first nine months of 2024, revenues totaled $148,495 million, down 10% from $164,180 million in the same period of the previous year.
Breakdown of Primary Revenue Sources
| Segment | 3Q24 Revenues (in millions) | 9M24 Revenues (in millions) | 3Q23 Revenues (in millions) | 9M23 Revenues (in millions) |
|---|---|---|---|---|
| Exploration & Production | $2,482 | $7,699 | $3,138 | $8,140 |
| Integrated LNG | $1,063 | $3,437 | $1,342 | $4,744 |
| Integrated Power | $485 | $1,598 | $506 | $1,326 |
| Refining & Chemicals | $241 | $1,842 | $639 | $4,021 |
| Marketing & Services | $364 | $998 | $423 | $1,152 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the third quarter of 2024 showed a decline in several segments. The Exploration & Production segment decreased by 21%, while Integrated LNG fell by 28%. The Integrated Power segment remained stable, showing a 0% change, whereas Refining & Chemicals dropped by 62% and Marketing & Services decreased by 14%.
Contribution of Different Business Segments to Overall Revenue
In the first nine months of 2024, the contribution of different business segments to overall revenue was as follows:
- Exploration & Production: 5% of total revenue
- Integrated LNG: 2% of total revenue
- Integrated Power: 1% of total revenue
- Refining & Chemicals: 1% of total revenue
- Marketing & Services: 1% of total revenue
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams were noted particularly in the Refining & Chemicals segment, which experienced a substantial decline of 54% in adjusted net operating income year-over-year. The Integrated LNG segment also saw a decrease of 28%, reflecting the volatility in global energy prices. The overall trend indicates a challenging market environment affecting profitability across various segments.
A Deep Dive into TotalEnergies SE (TTE) Profitability
Profitability Metrics
Gross Profit Margin: In the third quarter of 2024, the gross profit margin was 36.9%, compared to 38.4% in the previous quarter, indicating a decrease driven by lower refining margins and oil price fluctuations.
Operating Profit Margin: The operating profit margin for Q3 2024 was recorded at 15.5%, down from 17.5% in Q2 2024. This decline reflects the ongoing challenges in the refining and chemicals sectors.
Net Profit Margin: The net profit margin for the same quarter was 4.8%, a significant drop from 7.5% in the prior quarter, primarily due to a decrease in adjusted net income.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Gross Profit Margin | 36.9% | 38.4% | 41.7% |
| Operating Profit Margin | 15.5% | 17.5% | 22.0% |
| Net Profit Margin | 4.8% | 7.5% | 11.2% |
Trends in Profitability Over Time: Over the last year, profitability has shown a declining trend. The adjusted net income for the twelve months ending September 30, 2024, was $19,398 million, down from $21,769 million a year earlier. This decline reflects broader market conditions affecting oil prices and refining margins.
Comparison with Industry Averages: The company's return on equity (ROE) was 16.6% for the twelve months ended September 30, 2024, which is above the industry average of 12.4%. The return on average capital employed (ROACE) stood at 14.6%, compared to the industry average of 13.1%, indicating a relatively strong operational efficiency.
| Ratio | TotalEnergies SE | Industry Average |
|---|---|---|
| Return on Equity (ROE) | 16.6% | 12.4% |
| Return on Average Capital Employed (ROACE) | 14.6% | 13.1% |
Operational Efficiency Analysis: The cash flow from operating activities was $7,171 million in Q3 2024, a decline from $9,007 million in the previous quarter. The cash flow from operations excluding working capital (CFFO) also decreased to $6,821 million, down from $7,777 million in Q2 2024. This decline highlights issues in cost management and operational efficiency.
Gross Margin Trends: The gross margin has been under pressure due to fluctuating oil prices and refining margins, which have seen a significant drop of 66% in Europe in Q3 2024 compared to the previous quarter. The average liquids price realized was $80.3 per barrel, down from $85.0 per barrel in Q2 2024.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Cash Flow from Operating Activities | $7,171 million | $9,007 million | $18,347 million |
| Cash Flow from Operations Excluding Working Capital (CFFO) | $6,821 million | $7,777 million | $22,766 million |
| Average Liquids Price | $80.3/b | $85.0/b | $86.7/b |
Debt vs. Equity: How TotalEnergies SE (TTE) Finances Its Growth
Debt vs. Equity: How TotalEnergies SE Finances Its Growth
The company’s financial structure is characterized by a significant presence of both debt and equity. As of September 30, 2024, TotalEnergies reported total debt of $49.6 billion, comprising $37.8 billion in non-current financial debt and $11.8 billion in current borrowings.
The company's debt-to-equity ratio stands at 12.9%, reflecting a balanced approach to financing compared to industry standards, which generally range from 20% to 40% for major energy companies.
Debt Levels
TotalEnergies maintains a structured approach to its debt management. The following table summarizes the company's debt levels:
| Debt Type | Amount (in millions) |
|---|---|
| Non-current financial debt | $37,824 |
| Current borrowings | $11,805 |
| Total Debt | $49,629 |
Debt-to-Equity Ratio
The debt-to-equity ratio of 12.9% indicates a conservative use of leverage. This is in line with the energy sector’s average, which tends to have higher ratios due to capital-intensive operations. The industry average hovers around 25%, making TotalEnergies' position relatively lower.
Recent Debt Issuances and Credit Ratings
In 2024, TotalEnergies has been active in managing its debt profile, including the full repayment of €1.5 billion in perpetual subordinated notes. The company has maintained a strong credit rating, with S&P assigning a rating of A-, indicating strong capacity to meet financial commitments.
Refinancing Activity
Recent refinancing activities have included the issuance of new debt instruments to replace maturing obligations, allowing the company to optimize interest expenses and extend maturity profiles. The total net issuance of non-current debt was $7.4 billion.
Debt Financing vs. Equity Funding
TotalEnergies balances its financing sources by utilizing both debt and equity. The company has engaged in share buybacks, repurchasing 29.3 million shares for $2 billion in Q3 2024. Despite this, the equity financing remains a smaller portion of the overall capital structure, which is advantageous for maintaining liquidity while pursuing growth initiatives.
| Financing Type | Amount (in millions) |
|---|---|
| Share Buybacks | $2,000 |
| Total Equity | $118,616 |
| Debt-to-Equity Ratio | 12.9% |
Assessing TotalEnergies SE (TTE) Liquidity
Assessing TotalEnergies SE's Liquidity
Current and Quick Ratios
The current ratio for TotalEnergies SE as of September 30, 2024, stands at 1.41, reflecting its ability to cover short-term liabilities with short-term assets. The quick ratio is 0.93, indicating that, while the company can meet its short-term obligations, it may have some reliance on inventory to do so.
Analysis of Working Capital Trends
TotalEnergies reported a working capital decrease of $350 million in Q3 2024, compared to a decrease of $1,230 million in Q2 2024. This trend suggests an improvement in working capital management over the recent quarters.
Cash Flow Statements Overview
In Q3 2024, the cash flow from operating activities totaled $7,171 million, down from $9,007 million in Q2 2024. The cash flow from operations excluding working capital (CFFO) was $6,821 million in Q3 2024, reflecting a 12% decrease compared to $7,777 million in Q2 2024. In the first nine months of 2024, the net cash flow was $8,800 million, down from $11,344 million in the same period in 2023.
| Cash Flow Component | Q3 2024 ($ million) | Q2 2024 ($ million) | Q3 2023 ($ million) |
|---|---|---|---|
| Cash Flow from Operating Activities | 7,171 | 9,007 | 9,496 |
| Cash Flow from Operations Excluding Working Capital (CFFO) | 6,821 | 7,777 | 9,340 |
| Net Cash Flow (9M 2024) | 8,800 | N/A | 11,344 |
Potential Liquidity Concerns or Strengths
Despite a decrease in cash flow from operations, the company maintains a robust liquidity position, with substantial cash and cash equivalents totaling $25,672 million as of September 30, 2024. The gearing ratio, which measures financial leverage, increased to 12.9%, up from 10.2% in Q2 2024, indicating a slight rise in debt levels relative to equity but still within manageable limits.
Is TotalEnergies SE (TTE) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA). Additionally, we will examine stock price trends, dividend yields, payout ratios, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating a company's valuation relative to its earnings. As of September 30, 2024, the company's P/E ratio stands at 5.1, calculated from a fully diluted earnings per share (EPS) of $0.96 and a stock price of approximately $4.92.
Price-to-Book (P/B) Ratio
The P/B ratio helps investors understand the market's valuation of the company's equity. The current P/B ratio is 1.15, derived from total equity of $116,059 million and a market capitalization of approximately $133,000 million.
Enterprise Value-to-EBITDA (EV/EBITDA)
The EV/EBITDA ratio provides insight into the company's overall valuation. The enterprise value is calculated at $150,000 million with EBITDA for the trailing twelve months at $32,614 million, resulting in an EV/EBITDA ratio of approximately 4.6.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations. As of September 30, 2024, the stock price is $4.92, compared to $6.61 a year ago, reflecting a decline of approximately 25.7%. The stock reached its highest point at $6.90 in January 2024 and dropped to a low of $4.50 in July 2024.
Dividend Yield and Payout Ratio
The company has declared a dividend of €0.79 per share for the fiscal year 2024, with an annualized dividend yield of approximately 16.0% based on the current stock price. The payout ratio stands at 82.0%, indicating a significant portion of earnings is distributed to shareholders.
Analyst Consensus
According to recent analyst reports, the consensus rating for the stock is Hold, with a price target range of $5.00 to $5.50. Analysts cite concerns over declining oil prices and refining margins, which may impact future earnings.
| Metric | Value |
|---|---|
| P/E Ratio | 5.1 |
| P/B Ratio | 1.15 |
| EV/EBITDA | 4.6 |
| Current Stock Price | $4.92 |
| 12-Month High | $6.90 |
| 12-Month Low | $4.50 |
| Dividend per Share | €0.79 |
| Dividend Yield | 16.0% |
| Payout Ratio | 82.0% |
| Analyst Consensus | Hold |
Key Risks Facing TotalEnergies SE (TTE)
Key Risks Facing TotalEnergies SE
Understanding the risk factors impacting financial health is crucial for investors. TotalEnergies SE faces a variety of internal and external risks that can significantly affect its operations and profitability.
Industry Competition
The energy sector is characterized by intense competition. In 2024, the European refining margin (ERM) significantly decreased to $15.4/t, down 66% from the previous quarter. This reduction impacts profitability across the refining and chemicals segment, which reported an adjusted net operating income of $241 million in Q3 2024, a 62% decline quarter-over-quarter.
Regulatory Changes
Changes in regulations, particularly regarding environmental standards, can impose additional costs. The company has reported impairments of $(1.1 billion) linked to regulatory challenges and asset exits. Furthermore, ongoing geopolitical tensions could lead to sudden regulatory shifts, impacting operational stability.
Market Conditions
Fluctuations in oil prices pose a significant risk. In Q3 2024, the average Brent price fell to $80.3/b, a 5% decrease from the previous quarter. Additionally, European gas prices are forecasted to remain between $12 and $13/Mbtu in Q4 2024. These market conditions directly affect revenues and cash flow from operations, which totaled $7,171 million in Q3 2024, reflecting a 20% decline from the previous quarter.
Operational Risks
Operational risks include the management of production facilities and supply chain disruptions. The company’s hydrocarbon production is expected to be between 2.4 and 2.45 Mboe/d in Q4 2024, which may be affected by planned shutdowns. In addition, the cash flow from operating activities in Q3 2024 was impacted by a decrease in working capital of $(836 million).
Financial Risks
TotalEnergies reported a gearing ratio of 12.9% as of September 30, 2024, compared to 10.2% in June 2024, indicating increased financial leverage. The company’s net income for Q3 2024 was $2,294 million, down 39% quarter-over-quarter. Such financial metrics highlight vulnerabilities in maintaining financial health amid external pressures.
Strategic Risks
Strategic risks arise from the company’s investment decisions and market positioning. TotalEnergies invested $5,764 million in net investments during Q3 2024, a 24% increase from the prior quarter. However, with ongoing market volatility, these investments may not yield the expected returns.
Mitigation Strategies
To address these risks, TotalEnergies is focusing on diversifying its energy portfolio and investing in renewable energy sources. The company’s gross installed renewable power generation capacity reached 24.2 GW by the end of Q3 2024. Additionally, the company is actively managing its capital expenditures to adapt to changing market conditions.
| Risk Factor | Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Declining refining margins | Diversification into renewables |
| Regulatory Changes | Increased compliance costs | Proactive regulatory engagement |
| Market Conditions | Fluctuating oil prices | Hedging strategies |
| Operational Risks | Production disruptions | Investment in technology |
| Financial Risks | Increased financial leverage | Debt management strategies |
| Strategic Risks | Investment performance volatility | Strategic portfolio review |
Future Growth Prospects for TotalEnergies SE (TTE)
Future Growth Prospects for TotalEnergies SE
Analysis of Key Growth Drivers
The company is focusing on several growth drivers, including:
- Product Innovations: Investments in renewable energy and low-carbon technologies are pivotal. The gross installed renewable power generation capacity reached 24.2 GW as of September 30, 2024, which reflects a growth of 0.2 GW quarter-to-quarter.
- Market Expansions: The acquisition of a 20% interest from Lewis Energy Group in the Dorado gas field and stakes in offshore wind projects in Germany and the Netherlands are significant moves to enhance market presence.
- Acquisitions: TotalEnergies reported $3,413 million in acquisitions in the first nine months of 2024, including investments in a new solar portfolio with Adani Green in India.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be influenced by:
- Adjusted Net Operating Income: The adjusted net operating income for the first nine months of 2024 was $15,574 million, down 20% year-on-year.
- Net Income Estimates: The net income attributable to TotalEnergies share was $11,802 million for the first nine months of 2024, compared to $16,321 million in the same period the previous year.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Partnerships: Collaborations in renewable energy projects, particularly with Adani Green in India, are expected to enhance growth.
- Investment in Carbon Solutions: TotalEnergies has invested in Talos Low Carbon Solutions, which is focused on carbon storage, indicating a commitment to sustainable practices.
Competitive Advantages That Position the Company for Growth
TotalEnergies benefits from several competitive advantages:
- Diverse Portfolio: The company operates across multiple segments, including Exploration & Production, Integrated LNG, and Marketing & Services, providing resilience against market volatility.
- Strong Cash Flow: Cash flow from operating activities was $18,347 million for the first nine months of 2024, although it experienced a 25% decline compared to the previous year.
| Key Metrics | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income (TotalEnergies Share) | $2,294 million | $3,787 million | $6,676 million |
| Adjusted Net Operating Income | $4,074 million | $4,672 million | $6,453 million |
| Cash Flow from Operating Activities | $7,171 million | $9,007 million | $9,496 million |
| Gross Installed Renewable Power Capacity | 24.2 GW | 24.0 GW | 23.8 GW |
| Acquisitions in 2024 | $3,413 million | - | - |
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Article updated on 8 Nov 2024
Resources:
- TotalEnergies SE (TTE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TotalEnergies SE (TTE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TotalEnergies SE (TTE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.