The French oil giant will buy back 5% of its capital for an amount of 8 billion euros. Purpose of the maneuver, to redistribute even more money to its shareholders. However, CEO Patrick Pouyanné does not seem to fear the plan to tax share buybacks, limited to 1% according to him, envisaged by the government.
Happy as a shareholder of TotalEnergies stuffed, year after year, with superdividends by the group’s CEO Patrick Pouyanné on whom criticism and controversy seem to fall. While the question of taxing the superprofits of the CAC 40 giants has never been so present in the public debate to participate in the effort to reduce the deficit, the French oil giant is not changing its habits. On the occasion of the presentation of its strategy to investors in New York, this Wednesday, October 2, the group announced a new, very generous share buyback program of $8 billion for this year, corresponding to 5% of its capital. Between this operation – which aims to buy shares to then cancel them, which mechanically raises the stock price – and the distribution of a dividend up 7% for a total amount of 7.5 billion, in respect of results for the 2023 financial year, “the return to the shareholder should thus be greater than 45% of cash flow in 2024”, and not 40% as initially announced.
An announcement that looks a bit like a provocation the day after the general policy declaration which saw the new Prime Minister Michel Barnier confirm his intention to “request participation in collective recovery from large and very large companies that make significant profits”. With nearly 20 billion euros in profits in 2023 – the best profit in its history – TotalEnergies is, along with other big names like LVMH or Engie, particularly targeted by this future tax on superprofits, which the government has not yet detailed. the terms or the amount. One of the avenues in Bercy’s pipeline is the taxation of these share buyback operations, increasingly used by large international groups. Emmanuel Macron himself called for taxing this practice.
A tax that does not scare Patrick Pouyanné
In front of investors in New York, Pouyanné did not seem traumatized by this prospect: “The basis of the discussion revolves around a tax of 1%, similar to what is practiced in the United States”he explained. “It’s difficult for me to oppose it, because that’s what’s happening in the United States.”he admitted. Not even afraid. Ditto for the possible increase in corporate tax from 28 to 33% envisaged by the government: “the magnitude” profit tax “is quite limited” for TotalEnergies, which makes most of its profits abroad. “So I don’t expect there to be much impact for us”he indicated. But everything is happening as if Total was rushing to distribute as much money as it could to its shareholders before more uncertain times, with the predictable slowdown in the hydrocarbon market. Energy prices have indeed been falling in recent months and in the first half of 2024, Total’s net profit fell by 1%, while that of ExxonMobil fell 9.6% and that of BP was almost divided by five.
In the meantime, a new shower of money will reward TotalEnergies shareholders, starting with the Anglo-Saxon funds which hold 48% of its capital. For them, this new share buyback is the icing on the cake. Particularly for the largest holders of securities such as the French investment funds Amundi, the British MFS or the American State Street: those who want to sell shares in the company will be able to do so at the highest level and those who do not sell will see the TotalEnergies stock price rises further. Wednesday’s announcement has already sent the stock up more than 2.3%…
And it’s not over: for 2025, the oil company promises to “continue share repurchases at a rate of $2 billion per quarter,” and increase the dividend “at least 5%”. It is also committed to redistributing “more than 40% of cash flow through cycles” to its shareholders by 2030. There is no doubt that these figures should act as a red flag for those who are calling for taxation of TotalEnergies’ superprofits, both as a contribution to society and as compensation for its environmental debt. The environmental group in the Assembly will thus present this Thursday a bill to this effect, carried by deputies Eva Sas and Cyrielle Chatelain, believing that it is “the responsibility of oil and gas companies to finance repairs to the consequences of climate change according to the polluter/pays principle”. A taxation project which would be much more severe and generate tax revenue than that carried by the government of Michel Barnier, which “does not want to harm competitiveness” large companies.
“As long as there is demand”
But Patrick Pouyanné is not the type to cover his head with ashes. On the contrary, he seems determined to exploit the hydrocarbon vein “as long as there is demand”as he has already repeated many times: “Fundamentally, this is what brings us profits today […] and if I want to invest in system B [les énergies décarbonées, ndlr], I have to get the money from somewhere […] so we continue to invest in system A”the CEO explained to senators during his hearing by the commission of inquiry into TotalEnergies and the climate. The group again announced on Tuesday the launch of a new mega oil project in Suriname which will involve more than $10 billion in investments. And he raised his growth forecast by 3% per year by 2030 in hydrocarbons, mainly thanks to LNG (liquefied natural gas), with the launch in 2024 of six major projects (two in Brazil, Suriname, Angola, Oman, Nigeria) all contested by climate NGOs. In total, the group plans to invest between 16 and 18 billion dollars per year over the period 2025-30, of which only 5 billion will go towards low-carbon energies.
With a barrel of crude falling below the $70 mark last month, and questions about the growth in oil demand, particularly in China, TotalEnergies should however accelerate its renewable electricity projects around the world. We must not insult the future, when at the end of drilling we will reach the last barrels of oil and cubic meters of gas… The oil company announced this Wednesday that its electricity production would exceed 100 terawatt hours (TWh) in 2030, including 70% based on renewable energies, which would represent nearly 20% of its energy production by this time horizon. This will still be 80% hydrocarbons with a mountain of profits to boot.
