Total Reviews Third Quarter 2009 Results

The Board of Directors of Total, led by Chairman Thierry Desmarest, met on November 3, 2009 to review the Group's third quarter 2009 results. Adjusted net income was 1,869 million euros (M€), a decrease of 54% compared to the third quarter 2008 and an increase of 9% compared to second quarter 2009.

Commenting on the results, CEO Christophe de Margerie said, "In the third quarter, the average Brent price increased to 68 $/b. However, spot gas prices and refining margins reached very low levels, reflecting the sharp decline in demand and the resulting oversupply. The Chemicals segment benefited from a small improvement in margins.

"In this mixed environment, Total’s adjusted net income was 2.7 billion dollars, an increase of 14% compared to the second quarter 2009. Compared to the third quarter 2008, when oil prices hit record highs, the Group’s results are down 56%, but, once again, they show resilience that is among the best of the peer group. In the third quarter 2009, the Group generated net cash flow of 3 billion dollars and reduced its gearing to 21%.

"In the Upstream, Total's production is back on track with growth of 3% from the second quarter to 2,243 kboe/d, thanks in particular to the ramp up of Akpo in Nigeria and Tahiti in the Gulf of Mexico as well as the start-up of Tyrihans in Norway, Tombua Landana in Angola and Qatargas 2 Train B. The mid-October start-up of Yemen LNG completes the Group’s objective to start up its 2009 major projects.

"Total is also pursuing the development of new fields and took decisive steps during the quarter on projects in Bolivia, Algeria and Thailand. The recent agreement with KazMunaïGas in the Caspian Sea, like the one signed with Novatek in Russia in the previous quarter, also illustrates the Group’s ability to create partnerships and to participate in the development of new resources by leveraging its technical expertise and its capacity for investment. At the same time, the Upstream segment is continuing to actively implement cost reduction programs targeting its fixed costs and the projected cost of its investments.

"Total is determined to pursue its strategy of profitable and responsible growth, while reaffirming the priority of safety and the environment. Combining the key elements of reliability and safety in our operations and production growth with cost reduction will allow us to successfully implement our strategy."

Third quarter 2009 results

Operating income

In the third quarter 2009, the Brent price averaged 68.1 $/b, a decrease of 41% compared to the third quarter 2008 and an increase of 15% compared to the second quarter 2009. The TRCV European refining margin indicator fell to 6.6 $/t on average in the third quarter 2009, a decrease of 85% compared to the third quarter 2008 and 47% compared to the second quarter 2009.

The euro-dollar exchange rate averaged 1.43 $/€ in the third quarter 2009 compared to 1.51 $/€ in the third quarter 2008 and 1.36 $/€ in the second quarter 2009.

In this environment, the adjusted operating income from the business segments was 3,510 M€, a decrease of 57% compared to the third quarter 20087. Expressed in dollars, the decrease was 59%.

The effective tax rate for the business segments was 57% in the third quarter 2009 compared to 56% in the third quarter 2008.
Adjusted net operating income from the business segments was 1,808 M€ compared to 4,063 M€ in the third quarter 2008, a decrease of 56%.

Expressed in dollars, adjusted net operating income from the business segments was 2.6 billion dollars (B$), a decrease of 58% compared to the third quarter 2008.

Net income

Adjusted net income was 1,869 M€ compared to 4,070 M€ in the third quarter 2008, a decrease of 54%. Expressed in dollars, adjusted net income decreased by 56%. It excludes the after-tax inventory effect, special items, and the Group's equity share of adjustments and selected items related to Sanofi-Aventis.

  • The after-tax inventory effect had a positive impact on net income of 122 M€ in the third quarter 2009 and a negative effect of 752 M€ in the third quarter 2008.
  • The Group's share of adjustments and selected items related to Sanofi-Aventis had a negative impact on net income of 70 M€ in the third quarter 2009. The adjustments related to Sanofi-Aventis had a negative impact of 78 M€ in the third quarter 2008.
  • Other special items had a positive impact on net income of 2 M€ in the third quarter 2009. In the third quarter 2008, other special items had a negative impact on net income of 190 M€9.

Reported net income (Group share) was 1,923 M€ compared to 3,050 M€ in the third quarter 2008. The effective tax rate for the Group was 56.5% in the third quarter 2009. The Group did not buy back shares in the third quarter 2009. Adjusted fully-diluted earnings per share, based on 2,236.8 million fully-diluted weighted-average shares, was 0.84 euros compared to 1.81 euros in the third quarter 2008, a decrease of 54%. Expressed in dollars, adjusted fully-diluted earnings per share fell by 56% to $1.20.

Cash flow

Cash flow from operating activities was 4,538 M€ in the third quarter 2009 compared to 7,338 M€ in the third quarter 2008. The 38% decrease was mainly due to the decrease in net income and a decrease in working capital requirements in the third quarter 2009 that was smaller than the decrease in working capital requirements in the third quarter 2008.

Results for the first nine months 2009

Operating income

Compared to the first nine months of 2008, the oil environment in the first nine months of 2009 was marked by a 48% decrease in the average price of Brent to 57.3 $/b. The TRCV European refining margin indicator fell by 51% to 17.9 $/t. The euro-dollar exchange rate was 1.37 $/€ in the first nine months of 2009 compared to 1.52 $/€ in the first nine months of 2008. In this context, the adjusted operating income from the business segments was 10,169 M€, a decrease of 56% compared to the first nine months of 2008. Expressed in dollars, adjusted operating income from the business segments was 13.9 B$, a decrease of 60% compared to the first nine months of 2008.

The effective tax rate15 for the business segments was 55% in the first nine months of 2009 compared to 58% in the first nine months of 2008, reflecting mainly the lower tax rate in the Upstream. Adjusted net operating income from the business segments was 5,536 M€ compared to 11,019 M€ in the first nine months of 2008, a decrease of 50%. The smaller decrease, relative to the one in adjusted operating income, is essentially due to the lower effective tax rate between the two periods and a more limited decrease in the contribution from equity affiliates. Expressed in dollars, adjusted net operating income from the business segments fell by 55%.

Net income

Adjusted net income decreased by 48% to 5,703 M€ in the first nine months of 2009 from 11,047 M€ in the first nine months of 2008. It excludes the after-tax inventory effect, special items, and the Group’s equity share of adjustments and selected items related to Sanofi-Aventis.

  • The after-tax inventory effect had a positive impact on net income of 1,237 M€ in the first nine months of 2009 compared to a positive impact of 676 M€ in the first nine months of 2008.
  • The Group's share of adjustments and selected items related to Sanofi-Aventis had a negative impact on net income of 252 M€ in the first nine months of 2009. The adjustments related to Sanofi-Aventis had a negative impact on net income of 227 M€ in the first nine months of 2008.
  • Other special items had a negative impact on net income of 306 M€ in the first nine months of 2009 compared to a negative impact of 112 M€ in the first nine months of 200816.

Reported net income (Group share) was 6,382 M€ compared to 11,384 M€ in the first nine months of 2008. The effective tax rate for the Group was 55% in the first nine months of 2009. The Group did not buy back shares in the first nine months of 2009. On September 30, 2009, there were 2,239.7 million fully-diluted shares compared to 2,238.3 million fully-diluted shares on September 30, 2008.

Adjusted fully-diluted earnings per share, based on 2,235.9 million weighted-average shares was 2.55 euros compared to 4.91 euros in the first nine months of 2008, a decrease of 48%. Expressed in dollars, the adjusted fully-diluted earnings per share was 3.49 compared to 7.47 in the first nine months of 2008, a decrease of 53%.
 

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Brent Crude Oil : $50.75/BBL 0.09%
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