PARIS -French oil major TotalEnergies reported an 18% drop in adjusted net income for the first quarter to $4.2 billion, slightly short of expectations, as debt rose and earnings fell across all business segments except liquefied natural gas.

The results, slightly below analysts' $4.3 billion consensus forecast in an LSEG Refinitiv poll, sent shares down 4% in early trade, with investors likely concerned by the larger than expected rise in net debt, analysts at RBC and Jefferies said.

Debt hit $20.1 billion, up from $10.9 billion in the fourth quarter of 2024, largely due to seasonally higher working capital needs that would reverse later this year, TotalEnergies said in a statement.

The company also confirmed plans for share buybacks of up to $2 billion in the second quarter, even as Brent crude prices have fallen below $70 per barrel this month. 

However, "even on a pre-working capital, organic basis, free cash flow was $2.5 billion, insufficient to cover both dividends and buybacks", wrote Jefferies analyst Giacomo Romeo in a note.

CEO Patrick Pouyanne told investors last year he was willing to borrow to maintain dividends and buybacks even as oil prices dropped.

Despite boosting oil and gas production 4% from a year ago, upstream profits fell 6% due to lower oil prices.

Income from TotalEnergies' refining and chemicals segment was down 69% from the same period last year, slightly lower than the firm had flagged in a trading update earlier this month.  

Profit margins on refining oil into fuels in Europe have risen over the past six months, but are still 59% lower than a year ago, largely due to weak demand and new competition from Asian and African refineries.

Earnings from marketing and services were 6% down from a year ago, but 34% lower than the fourth quarter of 2024, which TotalEnergies attributed to the seasonality of the business.

Integrated LNG earnings were up 6% year-on-year, but 10% lower than the fourth quarter of 2024.

British peer BP this week reported a 48% profit drop on weaker refining and natural gas trading, while Portugal's Galp posted a 29% drop, citing low refining margins and falling oil prices.

Unlike BP, Shell and Equinor, TotalEnergies has stuck to its strategy of increasing its renewable energy holdings as it grows its legacy oil and gas business.