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TotalEnergies Q2 Headline Results Slightly Soft; Credit Metrics Steady

ENERGY SECTOR

A1/A+/AA-
• Results slightly credit negative, coming short of consensus despite expectations having been revised downwards on the previous trading update as a result of lower natural gas prices and weaker refining margins. Leverage steady with cashflow lower on the weaker op performance.
• Q2 adj-EBITDA -4% QoQ and flat YoY (-1.4% vs. BBG consensus). Adj-NI -34% YoY and -7% YoY (-5.1% vs. BBG consensus).
• CFFO ex. WC -5% QoQ and -36% YoY. Accounting for WC we saw USD 9bn from USD 2.2bn in Q1 and USD 9.9bn in Q223.• CapEx was USD 4.4bn (+8% QoQ, +3% YoY) leading to net cash flow of USD 3.1bn (-31% QoQ, -19% YoY). Q2 dividend maintained at EUR 1.8bn with a further USD2bn in buybacks signalled. • Net debt fell from USD 14.2bn at Q1 to USD 13.7bn though combined with the lower EBITDA we see leverage flat vs. Q1 at 0.3x.

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