Total Profit Falls; Beats Expectations
Earnings for the first quarter at French energy giant Total, SA (NYSE: TOT – $50.91) were hit hard as the lowest oil prices in a decade continued to ravage the industry, but a better-than-expected net profit suggested the company’s management of the turmoil is bearing fruit. Net profit fell 40% to $1.61 billion, from $2.66 billion a year earlier. On a per share basis, earnings were $0.68 beating analyst expectations of $0.40. Sales fell 22% to $32.84 billion and shy of most estimates of $33 billion. Total’s better-than-expected financial performance occurred during a quarter of low expectations, when oil prices averaged below $35 a barrel, down from more than $100 a barrel in 2014. The company said it boosted output to a 10-year record of 2.48 million barrels of oil equivalent a day in the first quarter, increasing its upstream exploration-and-production division. Total said it had squeezed the technical cost of extracting oil and gas down to $23 a barrel in 2015. The company’s downstream business achieved solid results. The Refining and Chemicals segment operating income was up 3% from a year ago thanks in part to a high utilization rate at the company’s refineries and lower input costs.
Income investors with a longer-term bent may find these good-quality ADRs of interest. The company delivers a healthy dividend yield (5.3%) at present and boasts wide rebound potential three to five years hence and total returns to late decade are above average assuming oil prices stabilize.