TotalEnergies SE — 2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; the filing is an annual report, not a standalone fourth-quarter report. Financial statements are prepared under IFRS as issued by the IASB and adopted by the EU, and presented in U.S. dollars. The company operates across exploration and production, LNG, power, refining and chemicals, and marketing and services.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Sales | $237.1 billion | $281.0 billion |
| Net income attributable to TotalEnergies | $21.4 billion | $20.5 billion |
| Adjusted net income | $23.2 billion | $36.2 billion |
| Adjusted EBITDA | $50.0 billion | $71.6 billion |
| Cash flow from operating activities | $40.7 billion | $47.4 billion |
| Cash flow from operations excluding working capital (CFFO) | $35.9 billion | $45.7 billion |
| Cash flow used in investing activities | $16.5 billion | $15.1 billion |
| Net investments | $16.8 billion | $16.3 billion |
| Net debt | $6.3 billion | $8.6 billion |
| Gearing, excluding leases | 5.0% | 7.0% |
| Cash and cash equivalents at year-end | $27.3 billion | $33.0 billion |
| ROE / ROACE | 20.4% / 18.9% | 32.5% / 28.2% |
Reported earnings per diluted share were $8.67, up from $7.85. The ordinary 2023 dividend proposed was €3.01 per share, 7.1% above 2022; the proposed final installment was €0.79 per share. The company repurchased $9.0 billion of shares in 2023. Its payout ratio, a non-GAAP measure, was 46.0%, versus 37.2%.
Cash flow from operations included a working-capital release; management cited approximately $4.8 billion on a replacement-cost basis, including about $2 billion linked to exceptional fiscal-debt movements. Cash and cash equivalents included $1.8 billion subject to restrictions. The company reported $10.6 billion of committed credit facilities for TotalEnergies SE, entirely undrawn, and stated that working capital was sufficient for present requirements.
Material changes versus 2022
- Lower energy prices and refining margins weighed on adjusted earnings: average Brent fell 18% to $82.6 per barrel; average realized gas and LNG prices declined 50% and 32%, respectively.
- Reported net income rose 4%, while adjusted net income fell 36%. Adjustments included $2.0 billion in asset-sale gains, $2.2 billion in asset impairments, and negative inventory and other adjustment effects. In 2022, large Russia-related impairments contributed to a substantially higher adjustment burden.
- Operating cash flow declined 14% and CFFO declined 21%. Net cash flow was $19.1 billion, down from $29.4 billion.
- Hydrocarbon production was 2.483 million barrels of oil equivalent per day, 2% higher than 2022 excluding Novatek; reported total production was lower year over year, reflecting the prior-period inclusion of Novatek. LNG production excluding Novatek rose 9%.
- Integrated Power adjusted net operating income increased 90% to $1.9 billion and CFFO more than doubled to $2.2 billion. Renewable installed capacity reached 22.4 GW, up 33%.
- Exploration & Production adjusted net operating income fell 37% to $10.9 billion; Integrated LNG fell 37% to $6.2 billion; and Downstream adjusted net operating income fell to $6.1 billion from $8.9 billion.
- Net debt fell and gearing improved, while cash balances decreased. Capital expenditures and total expenditures increased, and 2023 divestments included Canadian upstream assets and the German retail network.
Outlook, commentary and risks
- 2024 outlook: Management expected hydrocarbon production to grow 2% versus 2023 excluding Canada, with first-quarter production above 2.4 million barrels of oil equivalent per day. It expected LNG sales above 40 million tonnes, an average LNG selling price around $10 per million Btu in the first quarter, and full-year refining utilization above 85%.
- Shareholder returns: The Board confirmed a 2024 policy combining a 6.8% increase in interim dividends to €0.79 per share and $2 billion of buybacks in the first quarter, described as the base quarterly buyback level in the current environment. These are forward-looking plans, not guaranteed outcomes.
- Key sensitivities: Results are exposed to oil and gas prices, refining and marketing margins, foreign exchange—particularly the dollar/euro rate—OPEC+ decisions, demand, operating performance, regulation, and geopolitical developments.
- Russia and sanctions: Arctic LNG 2 was placed under U.S. sanctions in November 2023; TotalEnergies suspended its rights and obligations under related agreements and no longer accounts for its 10% stake using the equity method. The company’s 19.4% Novatek stake is carried at zero fair value; Yamal LNG’s equity-accounted investment was valued at $4.6 billion at year-end. Future sanctions or conflict developments could affect Russian activities and Yamal LNG.
- Impairments and estimates: 2023 impairments included upstream assets in Kenya and Congo, the Yunlin offshore wind project in Taiwan, and gas and power customer portfolios. Asset valuations depend on uncertain long-term commodity-price, carbon-price, reserve, production and discount-rate assumptions; further impairments are possible.
- Legal and other contingencies: The filing describes climate-related litigation and appeals, a U.S. FERC trading investigation that the company contests, and a complaint relating to events in Mozambique. The company says it does not consider the disclosed guarantees or other off-balance-sheet arrangements reasonably likely to have a material effect, but contractual obligations and guarantees are substantial. Litigation reserves were $476 million at year-end.
- Other unusual items: The company recorded $2.3 billion of impairments in net operating income. It also reported a 2023 working-capital release and significant asset-sale gains. Segment results are presented using non-GAAP adjusted measures; the company cautions these should not replace IFRS results and may not be comparable across issuers.
The independent auditors issued unqualified opinions on the consolidated financial statements and internal control over financial reporting. They identified impairment testing of exploration and production assets and estimation of hydrocarbon reserves as critical audit matters.
Important facts for investors to verify
- Reconcile reported net income growth with the decline in adjusted net income, including the effects of asset disposals, impairments, taxes and inventory valuation.
- Assess the sustainability of operating cash flow after separating working-capital movements, including exceptional fiscal-debt effects, from underlying cash generation.
- Review the assumptions behind 2024 production, LNG sales, refining utilization and shareholder-return plans against subsequent reported results and market conditions.
- Examine Russia-related exposure, sanctions compliance, the valuation of Yamal LNG and the zero fair value assigned to the Novatek stake.
- Evaluate impairment sensitivity to commodity prices, carbon costs, reserves, production profiles and discount rates, and track the disclosed litigation and guarantee exposures.