The Shareholders' Newsletter #69 - Fall 2022

Analysis & outlook


© Lutt Julien - Capa - TotalEnergies

TotalEnergies reports IFRS net income of $6.6 billion, driven by its LNG business, strengthens its balance sheet and shares benefit with employees and shareholders.
By Jean-Pierre SbraireChief Financial Officer

In a context marked by an average Brent price of $100/barrel and an increase in gas prices exacerbated by Russia’s military aggression in Ukraine, TotalEnergies leveraged its integrated model, particularly LNG, to generate results in line with previous quarters. In the third quarter 2022, the Company therefore posted adjusted net income of $9.9 billion and IFRS net income of $6.6 billion after taking into account a new impairment of $3.1 billion related to Russia. Cash flow was $11.7 billion, and the Company strengthened its balance sheet with a gearing ratio of 4%. Return on equity was more than 30% over the past
12 months.

The iGRP (integrated Gas, Renewables & Power) segment reported record adjusted net operating income of $3.6 billion this quarter, up $1.1 billion from the second quarter, and cash flow of $2.7 billion, driven by an average LNG selling price up more than 50% compared to the previous quarter and by the strong performance of its trading activities. The Company continued to implement its growth strategy by taking a stake in the North Field South LNG project in Qatar. In Electricity & Renewables, TotalEnergies completed the acquisition of 50% of the Clearway Energy Group in the United States and announced a significant acquisition in Brazil.

Exploration & Production posted adjusted net operating income of $4.2 billion and cash flow of $6.4 billion, despite a decrease in production this quarter, mainly due to unplanned shutdowns at Kashagan. TotalEnergies started production at the Ikike field in Nigeria, launched the Begonia project in Angola and the Fenix project in Argentina, and announced a significant gas discovery in Cyprus.

Downstream benefited from strong distillate margins, generating an outstanding adjusted net operating income of $2.4 billion and a cash flow of $2.9 billion.

In this favorable environment, taking into account income and production taxes of
$26 billion worldwide, the Company is implementing a balanced value-sharing policy with the decision to pay an exceptional one-month-salary bonus in 2022 to all its employees* worldwide and, as announced on September 28, its shareholder return policy targeting 35-40% cash flow payout beginning in 2022.

The Board of Directors therefore decided to distribute a third interim dividend for the 2022 financial year in the amount of €0.69/share, equal to the first and second 2022 interim dividends and an increase of 5% from the interim and the final dividends paid for the 2021 financial year, and set the ex-dividend and payment dates (December 6 and December 16 respectively) for the interim special dividend of €1/share in December 2022.

*Payment, capped for high salaries, to employees of all fully owned companies and of companies in which TotalEnergies holds more than 50%, subject to agreement by their governing bodies.

Return on equity (ROE)

Equity comprises shareholders’ financial contributions and undistributed company profits. Return on equity (ROE) is the ratio of the adjusted net income to the average equity over a given period. ROE is therefore used to gauge the return on equity provided by a company’s shareholders