An employee of the ‘Total’ oil refinery stands in front of a large tank with the company logo in Leuna, Germany.
Waltraud Grubitzsch | image alliance via Getty Images
LONDON – France’s Total reported a huge year – on – year drop in profits on Tuesday after a tumultuous twelve months in which commodity prices collapsed amid the coronavirus pandemic.
The major subject for energy said that the net profit for the year 2020 stood at $ 4.06 billion, beating the expectations of $ 3.86 billion of analysts surveyed by Refinitiv. This compares with $ 11.8 billion for the 2019 financial year, reflecting a 66% year-on-year decline.
Total also posted a net profit of $ 1.3 billion in the fourth quarter, beating analysts’ expectations of $ 1.1 billion.
Total’s share has risen by about 0.8% in the past year, tumbling more than 28% last year.
“Total faced two major crises in 2020: the Covid-19 pandemic that severely affected global energy demand, and the oil crisis that pushed the Brent price to below $ 20 a barrel in the second quarter, “said Patrick Pouyanne, CEO of Total, in a statement.
“In this particularly difficult context, the Group has implemented an immediate action plan and demonstrated its resilience thanks to the quality of its portfolio,” he added.
Total said it would propose a fourth-quarter dividend payout of 0.66 euros ($ 0.8) per share, in line with previous quarters, and set the 2020 dividend at 2.64 euros per share.
The oil and gas industry was hit last year as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-offs and tens of thousands of job cuts.
Last week, BP, headquartered in the UK, reported a net loss for a decade for the first time in a decade, while US oil giant Exxon Mobil reported its fourth consecutive quarter of losses. The English-Dutch oil giant Royal Dutch Shell also reported a sharp drop in profit for the whole year.
BP CEO Bernard Looney described 2020 as the ‘toughest’ of his career, while Exxon Mobil CEO Darren Woods said the past twelve months were “the most challenging market conditions Exxon Mobil has ever experienced.”
Energy majors have warned that the ongoing coronavirus crisis is likely to affect their performance in the short term, while investors try to reassure about their future profitability.
Total confirmed this trend in its annual results, saying the oil environment “remains uncertain and dependent on the recovery of global demand, still affected by the Covid-19 pandemic.”
The international benchmark for Brent crude futures traded at $ 61.22 a barrel on Tuesday morning, about 1.1% higher, while US West Texas Intermediate futures rose to $ 58.54, up nearly 1%.
Brent prices exceeded $ 60 a barrel on Monday for the first time since January 2020.
Oil prices have steadily improved over the past few weeks, supported by continued production cuts and the massive deployment of Covid vaccines.
Growing pressure on Big Oil
Last month, Total became the first major global energy company to strike the American Petroleum Institute after a review of the influential oil and gas lobby.
Total said it had decided not to renew its membership in API this year, citing differences of opinion on climate policy and the group’s support for easing drilling regulations.
The move is thought to be a growing rift between oil and gas heads on either side of the Atlantic.
European oil and gas chiefs are generally more prepared to accelerate plans to reduce carbon emissions over the past year, while US counterparts such as Chevron and Exxon Mobil have opposed calls to diversify their portfolios.
This comes as the global oil and gas industry comes under increasing pressure from climate emergency campaigns, activist investors and policymakers around the world.
S&P Global Ratings – one of the most influential rating firms – warned last month that it could downgrade a number of major manufacturers, including Total, Royal Dutch Shell and ExxonMobil.
The rating agency said it was of the opinion that “the energy transition, price volatility and weaker profitability increase the risks for oil and gas producers.”