An employee of the ‘Total’ oil refinery stands in front of a large tank bearing the company’s logo in Leuna, Germany.
Waltraud Grubitzsch | image alliance via Getty Images
LONDON – Total France reported a massive drop in profit for the full year on Tuesday after 12 tumultuous months in which commodity prices plummeted amid the coronavirus pandemic.
The energy major said the full year 2020 net profit was $ 4.06 billion, exceeding the expectations of US $ 3.86 billion of analysts heard by Refinitiv. Compared to $ 11.8 billion in fiscal 2019, reflecting a 66% drop from the previous year.
Total also posted a net profit of $ 1.3 billion in the fourth quarter, exceeding analysts’ expectations of $ 1.1 billion.
Total’s shares rose about 0.8% in the year, having fallen 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 brought Brent’s price below $ 20 a barrel in the second quarter,” said the CEO of Total, Patrick Pouyanne, in a statement.
“In this particularly difficult context, the Group implemented an immediate action plan and proved its resilience thanks to the quality of its portfolio,” he added.
Total said it would propose a dividend payment in the fourth quarter of 0.66 euros ($ 0.8) per share, in line with previous quarters, and set the dividend for 2020 at 2.64 euros per share.
The oil and gas industry went bankrupt last year when 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, UK-based oil and gas giant BP, reported its first full year net loss in a decade, while American oil giant Exxon Mobil reported its fourth consecutive quarter of losses. Anglo-Dutch oil giant Royal Dutch Shell also reported a sharp drop in year-round profits.
BP CEO Bernard Looney described 2020 as the “toughest” of his career, while Exxon Mobil CEO Darren Woods said the past 12 months “presented the most challenging market conditions Exxon Mobil has ever experienced . “
Large energy companies have warned that the ongoing coronavirus crisis is likely to continue to impact its performance in the short term, while seeking to reassure investors about its future profitability.
Total reaffirmed this trend in its annual results, saying that the oil environment “remains uncertain and dependent on the recovery in global demand, still affected by the Covid-19 pandemic.”
Internationally renowned Brent crude futures traded at $ 61.22 a barrel on Tuesday morning, about 1.1% higher, while US West Texas Intermediate futures were at $ 58.54, almost 1% above.
Brent prices exceeded $ 60 a barrel on Monday for the first time since January 2020.
Oil prices have steadily improved in recent weeks, supported by ongoing production cuts and the massive rollout of Covid vaccines.
Increasing pressure on Big Oil
Last month, Total became the first major global energy company to leave the American Petroleum Institute after a review of the influential oil and gas lobby.
Total said it decided not to renew its association with the API this year, citing disagreements over climate policies and the group’s support to ease drilling regulations.
The move was thought to represent a growing divide between the major oil and gas companies on both sides of the Atlantic.
In general, large European oil and gas companies have been more willing to accelerate plans to cut carbon emissions in recent years, while American competitors such as Chevron and Exxon Mobil have resisted calls to diversify their portfolio.
This comes at a time when the global oil and gas industry is facing increasing pressure from emergency climate activists, activist investors and lawmakers around the world.
S&P Global Ratings – one of the most influential rating companies – warned last month that it could lower the credit scores of several major producers, including Total, Royal Dutch Shell and ExxonMobil.
The rating company said it believed that “the energy transition, price volatility and lower profitability are increasing the risks for oil and gas producers”.