French energy giant TotalEnergies reported Thursday that its second-quarter net income fell as lower natural gas prices and thinner refining margins in Europe weighed on earnings.
TotalEnergies said adjusted net income dropped to $5 billion in the April-June period from $6.5 billion in the first quarter of 2022 and $9.8 billion a year earlier. The results missed analyst forecasts of $5.2 billion.
The company attributed the profit decline to a more than halving of its average refining margin per ton to $42.7 compared to the first quarter and a drop of over two-thirds from the same period last year. European refining margins were hit by higher Chinese exports and reconfigured Russian oil exports.
TotalEnergies confirmed it would carry out $2 billion in share buybacks in the third quarter as previously announced.
The earnings drop reflects lower natural gas prices and stable oil prices compared to surging commodity costs last year following Russia's invasion of Ukraine that had driven energy company profits to record highs. But fears of shortages have since eased, weighing on prices and corporate profits.
TotalEnergies shares fell 1.4% on Thursday as the results came in below expectations and weighed on the stock. The company sees some improvement in refining margins and LNG prices during the second half of the year.
TotalEnergies' profit decline is similar to drops reported by peers Shell and Equinor, showing that big oil companies are vulnerable to plunges in energy prices after benefiting from surging costs.
