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French Oil Company Total Sees Profit Jump

Posted on: Wednesday, 15 February 2006, 09:01 CST

PARIS - Total SA, the world's fourth-largest oil company, reported Wednesday its net profit for the year rose 13 percent to a record 12.27 billion euros ($14.63 billion), crediting higher oil prices that have pumped up earnings at many oil companies.

Total also reported a strong increase in refining margins that helped increase 2005 net income from 10.9 billion euros a year earlier.

Total's adjusted net profit for the year, stripping out one-time amortization charges and the impact of a shift to a new inventory accounting method, rose 31 percent to 12 billion euros ($14.2 billion), the company said.

The results broadly matched analysts' expectations. An IBES consensus of 23 analysts expected Total to post an annual net profit of 12.34 billion euros ($14.68 billion) for 2005.

For the fourth-quarter, Total's adjusted net profit came in at 3.05 billion euros ($3.63 billion), the company said, up 16 percent.

Fourth-quarter revenues rose 19 percent to 39.9 billion euros ($47.5 billion) as full-year revenues rose 17 percent to 143.2 billion euros ($170.38 billion).

Analysts said they were impressed by Total's ability to replace reserves, which at 20 billion barrels - up from 18.4 billion a year earlier - amounted to 22 years of current output.

"This clearly sets Total apart from Royal Dutch Shell or Repsol, both of which are struggling along with Exxon Mobil and ChevronTexaco to replace current production," Kepler Equities Strategist Edmund Shing told Dow Jones Newswires.

Total, which has drawn controversy in France for benefiting from higher prices on the backs of consumers, also said it will increase its dividend by 20 percent to 6.48 euros ($7.71) per share for 2005.

Total's exploration and production division was its big growth driver, with an adjusted operating profit surging 43 percent to 18.4 billion euros ($21.89 billion) thanks to rising petroleum prices last year and a stronger dollar in the fourth quarter.

Oil prices jumped around 40 percent last year, topping $70 a barrel in the summer months after Hurricane Katrina struck.

Outages due to the hurricanes in the Gulf of Mexico affected Total's refining operations, which recorded a decline of 11 percent in adjusted operating profit in the fourth quarter. For the full year though, operating income for the division rose 21 percent to 3.9 billion ($4.64 billion) behind robust margins. Refining margins have been declining in the first quarter of 2006 in Europe.

Chemical operations suffered from high raw material costs in the fourth quarter, leading to a drop of 47 percent in adjusted operating profit.

Total confirmed the spinoff of its chemicals operations, Arkema, in the first half of 2006, and capital expenditures will be relatively stable for the next five years.

Chairman and Chief Executive Thierry Desmarest, commenting on the figures, appeared to dispel reports in French media that one of his titles could be given to another executive.

"I have always said that I'll make sure to organize my succession," he said. "And I'm confident that we have the skills needed in house ... But this is not an issue for 2006."

Shares of Total fell 0.4 percent to 214.40 euros ($255.19) in Paris trading.

Source: Associated Press/AP Online

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