Total, SA Swings to a Loss, Hikes Dividend
French integrated oil giant Total, SA (NYSE: TOT – $54.21) reported a net loss of $5.66 billion in the three months ended December from a net profit of $2.23 billion in the same quarter the previous year. It wrote off $6.5 billion of the value of its less profitable shale and oil sands ventures, as well as its unprofitable European refineries. Excluding the write-downs and adjusting for changes in inventories, the company reported a net profit of $2.80 billion in the quarter, equal to $1.22 per share, down from $1.47 a year ago, but $0.16 ahead of Street views. Sales fell 19% to $52.51 billion down from $64.98 billion. The sharp drop-off reflects a lower contribution from Upstream (exploration and production) driven by a sharp decline in Brent oil prices, partially offset by a solid performance in Refining and Chemicals. Total will cut 6,000 jobs, sell assets worth $5.5 billion and freeze the hiring of new staff at its production, refinery and petrochemicals operations as part of a $4 billion plan to reduce costs and rein in investments this year. Total said it aims to become profitable at an oil price of $70 a barrel. The Board of Directors decided to hike the dividend by 2.5%, which will provide investors with a quarterly payout of $0.754, based on current exchange rates yielding about 5.56%, at today’s levels. The beaten down ADRs offer solid 3- to 5-year total return possibilities and this high-quality issue is well suited for patient investors with an eye on income.