Total's 4Q Adjusted Net Profit Up 23%; Boosts 2011 Investment

PARIS (Dow Jones Newswires), Feb. 11, 2011

Total matched expectations as it reported a 23% increase in adjusted net profit for the fourth quarter, boosted by higher oil prices and increased output despite impairment charges for its refining and marketing division.

Total also said it expects to invest $20 billion, or EUR16 billion, to develop new projects this year, up from $18 billion in 2010.

In the fourth quarter ended Dec. 31, Total's adjusted net profit grew 23% to EUR2.56 billion, compared with EUR2.08 billion a year earlier. This was in line with expectations for an adjusted net profit of EUR2.54 billion forecast by 11 analysts polled by Dow Jones Newswires. The adjusted net profit excludes special items and Total's equity share of adjustments related to Sanofi-Aventis (SNY).

Unadjusted net profit for the fourth quarter stood at EUR2.03 billion, down 2% from EUR2.06 billion in the same period a year earlier, Total said.

For the full year 2010, the group's adjusted net profit grew 32% to EUR10.23 billion, from EUR7.8 billion a year earlier.

In the fourth quarter, Total's output stood at 2.387 million barrels of oil equivalent per day, up from output of 2.377 million boe/d a year earlier and above the 2.379 million boe/d forecast by analysts.

Oil prices during the period soared from a year earlier, helping to boost the group's earnings, while demand for oil, natural gas and refined products remained subdued in developed countries due to the slow economic recovery there.

So far this year, "the European refining environment remains difficult with weaker margins compared to the first quarter of 2010," Total said.

The company also said the international benchmark Brent crude oil price so far this year has traded between $90 and $100 a barrel, a significant increase from the fourth-quarter 2010 average.

Brent oil prices in the fourth quarter averaged $86.5 per barrel, up 16% from a year earlier, while the EUR/USD rate on average stood at $1.36/EUR in the fourth quarter compared with $1.48/EUR in the fourth quarter 2009 and $1.29/EUR in the third quarter of 2010.

The European refining margin indicator in the fourth quarter was $32.3 per metric ton, compared with $16.4 per ton in the third quarter and $31.2 per ton in the second quarter. Refinery throughput was down 11% in the fourth quarter to 1.832 million barrels per day compared with a year earlier, mainly due to the shutdown of Total's Dunkirk refinery in northern France as well as a French nationwide strike in October which halted output for several days.

Total booked a EUR1.19 billion impairment charge at the operating profit level and a EUR913 million impairment at the net operating profit level, it said. The persistently poor economic environment for European refining in the fourth quarter prompted Total to book the impairment, essentially on its French and U.K. refining assets, the company said.

Speaking during a press conference, Total's Chairman and Chief Executive Christophe de Margerie said he hoped the company would close a deal to sell its U.K.-based Lindsey refinery by as soon as the end of the first quarter.

Total had initially planned to sell the refinery by the end of 2010 after it entered exclusive talks with one bidder in the autumn, following several offers, one of which was from Switzerland-based oil refining company Petroplus Holdings.

Total's board of directors will propose a dividend of EUR2.28 for the year.

In October last year, the company announced a change in its dividend policy, as its board decided to pay the 2011 dividend on a quarterly basis instead of annually, with the first interim dividend for 2011 to be paid in September 2011.

Copyright (c) 2011 Dow Jones & Company, Inc.