Total Sticks to Dividend Payout Despite Quarterly Profit Plunge


French energy company Total SA (TOT), which saw its quarterly profit plunge 35%, driven by the collapse in oil prices, is still maintaining its first interim dividend for the year.

Total’s net adjusted profit in the first quarter dropped 35% to $1.78 billion year-on-year, beating analysts’ estimates of $1.3 billion. The oil company’s Board of Directors declared an interim dividend stable at 0.66 euros per share, adding that it will be paid in cash exclusively. Shares rose 3.9% to $34.87 in pre-market U.S. trading.

“The Group is facing exceptional circumstances: the Covid-19 health crisis, which is affecting the world economy and creating major uncertainties, and the oil market crisis, with the sharp drop in oil prices since March,” said Chairman and CEO Patrick Pouyanné. “In an environment where prices fell by more than 30% on average during the first quarter, the Group’s cash flow decreased by 31% year-on-year to $4.5 billion and return on equity stood at 9.8%.

Pouyanné said that Total now anticipates 2020 production between 2.95 and 3 Mboe/d, a reduction of at least 5% from 2020 forecasts, reflecting the voluntary curtailment measures in Canada, the exceptional quotas announced by OPEC, lower local demand for gas and the situation in Libya. In addition, plant utilization rates and sales have been on average 50% below normal since mid-March, with uncertainty about the timing of a return to normal, he said.

Retail network sales were down 10% year-on-year due to the impact of the Covid-19 crisis. To combat the oil price crisis triggered by the coronavirus outbreak, Total on March 23, announced an action plan to cut its planned investments for 2020 by more than 20% to $15 billion. Oil prices have slumped to around $30 per barrel.

Total, which produces and markets fuels, natural gas and low-carbone electricity, has 100,000 employees and is active in more than 130 countries.

Wall Street analysts have a positive outlook on the stock. The Strong Buy consensus rating consists of 7 Buys and 1 Hold. The $42.89 average price target forecasts 28% upside potential in the shares in the next 12 months. (See Total’s stock analysis on TipRanks)

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