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TOTAL published very good quarterly results, well ahead of expectations and marked by production growth. Downstream operations and the Chemicals division are once more important contributory factors. The balance sheet remains solid. PLUS code confirmed.
With a solid balance sheet, 20 years of proven and probable reserves, a high reserve renewal rate and the lowest production costs in the sector, Total is in our opinion Europe’s best integrated oil company. The company was hit by the low oil price in 2009, but benefits from a defensive profile and potential for above average short-term production growth.
Results announced by TOTAL for the 4th quarter of 2009 were slightly better than the consensus forecast. Upstream production rose again and is set to increase further in 2010. Technical costs are stable and the reserves have been renewed. Downstream operations and chemicals are still in some difficulty, but showing a positive result all the same. Gearing remains reasonable and the dividend stable. PLUS code confirmed.
TOTAL announced results slightly above consensus expectations in the 3rd quarter of 2009. Production is growing again at long last. Downstream business is still suffering, but chemicals produced surprisingly good figures. With the better upstream profitability of the sector and a barrel price of $68, free cash flow is comfortable again and gearing lower than before. PLUS code confirmed.
With a solid balance sheet, 20 years of proven and probable reserves, a high reserve renewal rate and the lowest production costs in the sector, Total is in our opinion Europe’s best integrated oil company. The company will be hit by the low oil price in 2009, but offers a defensive profile and long-term production growth potential.
Total has published results for Q1 2009 slightly above expectations, thanks to the upstream business and despite a 4.3% fall in production. Because of its production costs which are the lowest in the sector, and the moderation of Capex, the free cash flow remains positive and high, despite the substantial fall of the price per barrel. The group is the only major to have reduced its gearing during this quarter. The share is trading in line against European majors. Its 2009 production will show a more marked fall, but its reserves and balance sheet are better than average. PLUS code confirmed.
With a solid balance sheet, 20 years of proven and probable reserves, a high reserve renewal rate and the lowest production costs in the sector, we regard Total as the best integrated European oil major. The company will suffer from the low price of crude oil in 2009, but it does offer a defensive profile and long-term production growth potential.
Total has published goods results for Q4 2008. Production and reserves remain high. Margins on downstream activities and chemicals are higher than expected. The balance sheet remains strong and the dividend has been increased by 10%. The share is trading at a small premium against the European majors. This is still justified by the best results in the industry, the renewal rate of reserves, technical costs which remain the lowest in the sector and production growth expected in 2009. PLUS code confirmed.
Total has published record results for Q3 2008, slightly higher than market expectations. Despite 5% lower production, the business benefited from the price of hydrocarbons which remained high during this quarter, peak refining margins and good results for petrochemicals. The share is trading at a very slight premium against integrated European oil companies. We believe that the premium is justified by the quality of the assets, the reserves renewal rate, the lowest technical costs in the sector and the dividend policy (14% increase of the interim dividend announced). PLUS code maintained.
Today we met the Senior VP Strategy at TOTAL. We came away convinced of the quality of the Group’s model in terms of reserves, production profile, technical cost and allocation of financial resources. 3rd quarter results are also expected to be extremely strong. PLUS code confirmed.
Total is the world’s 4th ranking integrated entire oil group and the leading refiner-distributor in Europe. It has a long-term competitive advantage: important reserves, a high rate of renewal and low production costs. The company has a defensive profile with durable growth potential in production, profits and margins, all combined with a reasonable valuation.
Total has published record results for Q2 2008, above market expectations. Activity benefited from the strong rise of oil and gas prices and higher production levels. The Refining/Distribution division is slowing, but holding up better than the industry average, while Chemicals are down sharply. The net profit is benefiting from a favourable tax level. The share is trading at a slight discount against its European competitors, even though Total has one of the best industrial profiles. PLUS code confirmed.
Results published by Total for Q108 were above market expectations. The results were impacted, firstly, by the higher price of Brent crude, rising gas prices and the promotion of new projects and, secondly, by the fall of the USD and erosion of refining margins. From the valuation angle, the share is trading in line with its European competitors but offers one of the best industrial profiles and strong profit growth potential. PLUS code confirmed.
Total has published slightly better results for 2007 than the market had been expecting. The figures were positively impacted by globally favourable market conditions (higher price for Brent crude, robust demand, refining margin progression despite high volatility). The principal negative elements were the USD and petrochemicals which deteriorated during Q4 2007 in the wake of the higher price of naphtha. In terms of valuation, the share is trading in line with its European competitors, but offers one of the finest industrial profiles as well as substantial profit growth potential. PLUS code.
Q3 07 results published by Total were better than market expectations. The figures were affected by the falling value of the USD against the euro and weaker European refining margins and also by higher prices for Brent; in addition, new projects have come on stream. From the valuation angle, the share is trading in line with its European counterparts, although it offers better industrial profiles and potential for profit growth. PLUS code repeated.
Results published at the end of Q4 are good. Total is likely to benefit from higher production growth than its competitors. However, the share is still trading at a PER’07e of 9.6x against 10.4x for the sector; the share price does not reflect the quality of its fundamentals and management. The dividend yield also remains higher than the sector average (3.8% against 3.6% for the sector in 2007).
Total has published Q306 results slightly above consensus expectations. The results benefited from the strong growth of profits of downstream activities and chemicals with a moderate contribution from upstream business. Given the company’s industrial profile, the management quality, the valuation and the profit growth potential we confirm our PLUS code.
Total has published results generally in line with expectations. The only disappointment comes from the 8.6% fall in production. The share is trading with a slight discount, which does not reflect the quality of the management, profit growth potential and higher margins than the sector. PLUS code confirmed.
Total has published results for Q405 at the bottom end of the consensus range: EUR 3.05 billion net result against EUR 3.12 billion expected on average by the consensus. The results were positively affected by higher hydrocarbon (liquids and gas) prices, the progression of refining margins (+7%) and a better than expected recovery of the chemicals business activity. These factors were partially mitigated by such factors as the negative impact of the storms in the Gulf of Mexico and lower volumes in the North Sea caused by production stoppages and delayed project launches. We confirm our PLUS code because of the industrial profile, management quality and the profit growth potential.
Total has published good quarterly results with the net profit per share adjusted upwards by 36% (Y/Y) to EUR 5.32, at the top end of the consensus range. The company benefited from the steep rise in the average price of crude oil (+46%, USD 57.8/b) and gas (+31%, USD 4.65/Mbtu). The share is generally trading in line with the sector, but offers a higher growth potential because of the strong reserve replacement rate of approximately 130% and the lowest production cost of the entire industry (approx. USD 9/barrel versus USD 13/barrel for Royal Dutch Shell). We maintain our PLUS code.
The quality of Total’s results confirms this share as unquestionably the best in the oil sector. 1st quarter results were substantially above consensus and validate the strategy pursued by the group for many years. The valuation (EV/Ebitda 6.8x against BP at 8.0x) is still attractive. We maintain our PLUS code.
Total is an excellent investment in the oil industry. At EUR 9.6 billion, the 2004 results exceeded all hopes. The dividend paid out to shareholders has been reviewed upwards by 15%, i.e. more than expected. 4% production growth remains positive, with a horizon extended by 2 more years until 2010. Despite a slight fall in the number of years of reserves, the replacement ratio is above 100%. Finally, the cash flow level remains sustained with investments well under control. That being so, we must congratulate ourselves on holding shares in the group because cash return remains a priority. PLUS code maintained.
With its excellent Q3 results, Total is now highly profitable. In view of the result announced and the 50% payout target, the dividend should rise again. Total remains an excellent investment opportunity in the oil industry. The share is attractive for two reasons: the 2005 valuation (10.1x profit forecasts) represents an 8% markdown on the sector, and Total offers a total shareholder yield in the region of 6% to 7%, higher than the sector average (5%). We confirm our PLUS code.
Total has confirmed the signing of a protocol of agreement with Novatek, the leading independent Russian gas supplier. This agreement apparently involves a USD 1 billion investment package to acquire 25% of the capital plus one share, i.e. a blocking minority. Novatek is a major player in the operation of gas fields in Russia. It benefits from dynamic growth potential (>20% per year in the period 2003/2008) with a valuation of USD 4 billion, i.e. USD 1 per barrel. This is an excellent operation for Total with an immediate return on its investment. We maintain our PLUS code.
The forthcoming revision on 30 June of the weighting of securities in the CAC40 index could have a negative impact in the short term on Total’s price, due to the strict application of a rule whereby the weight of any one stock in the index cannot exceed 15%. At present, the market capitalization of Total represents 18.2% of the index. Linked to the change in the method of calculation, this could lead to a dilution of the weight of Total in the index of around 18%. Despite this probable technical impact at the beginning of September, our opinion of the stock remains unchanged.
The 18% net profit rise in 2003 is slightly above consensus. Despite a downward revision of production growth prospects from 5% to 4% until 2008, the company still offers the most interesting oil field portfolio in the sector. PLUS code confirmed.
Unlike its two continental rivals, Royal Dutch and BP, the French group did not disappoint market analysts with a net profit up 20% for the first nine months of 2003 in line with expectations. Despite Total’s higher exposure to the euro, we maintain our preference for the French share which still offers the most attractive growth profile of the sector (objective: +5% Y/Y until 2007).
The 48% rise o the net profit in the third quarter 2003 against 2002 confirms the very favourable environment for the oil companies at the beginning of the year. 2003 saw the start of a turnaround of refining margins. The upstream division remains extremely promising with 5% volume growth.
The net profit for 2002 is down 22%, at EUR 5.9 billion. This result is in line with expectations. The group's exploration/production is living up to its promises unlike its competitors with hydorcarbon production up 10% in 2002 against +3% for Royal Dutch and BP. Fundamentally, the group is among the most promising in its industry. However, the french government's position over the Iraq conflict seems to be affecting the share. In our opinion, this handicap should not last.
The French giant's operating profit is 24% lower in the first nine months of 2002, but nevertheless in line with its competitors and with forecasts. The upstream business has held up surprisingly well with a loss of just 8%, whereas downstream operations and chemicals are continuing to slow with tighter margins than in 2001. The high production growth target and continued rationalization of business activities make the French group one of our favourites in the oil industry.
In 2001 the French Group stood up well with a decline of just 2% in its net profit (against 2000) in a difficult environment for the oil industry (Brent –14% on average in 01 against 00). The Group has also confirmed the attainment of its production target of 2.2 million barrels per day and its intention of achieving a 10% production increase in 2002 against 2001. In view of the current projects, especially in Africa (Girassol, Gabon), the Group is unlikely to disappoint the market in 2002. We are maintaining our Plus code.
The 17% fall in the net profit year on year in the third quarter is in line with Royal Dutch Shell (RDS) and slightly less pronounced than at BP Amoco –20% (BPA). Downstream business has fallen sharply (-33%), whereas RDS and BPA reported slight increases in the third quarter. But this reduction is explained by a non-recurring effect and is not a worrying factor. The good surprise comes from upstream business which has declined less than in the case of competitor companies (-16% year on year against BPA –26% and RDS –23%). The rise in hydrocarbon production is in line with the group targets and similar to that of its competitors (+2.5% year on year). Finally, the production growth target of 10% for 2002 has been confirmed and we believe that with the development of its present wells the group will be able to step up production (unlike RDS). We maintain our preference for Total Fina Elf in this sector.
The involvement of Total Fina Elf (TFE) as a legal entity may result in the group being ordered to pay outstanding costs in relation to the sinking of the Erika. The maximum amount is estimated at Frf 2.8 billion (Eur 426 million). We estimate that the probability of TFE being found guilty is very low. The tanker and crew were not affiliated to the group (contrary to the Exxon Valdez). In the worst-case scenario, the financial impact would be minimal (estimated net profit for 2001 Eur 8 billion). The payment procedures would be very slow, thus reducing the impact on the group’s accounts (the amount of the Exxon penalty has still not been determined and the catastrophe occurred in 1994!). We are monitoring the impact as far as the group’s image is concerned. Our opinion remains unchanged and TFE is our preferred stock in the sector.
At EUR 4.3 billion, the net profit of Total Fina Elf is up 27% (1st half 01/1st half 00) and above forecasts. The environment in the oil industry has remained favourable and contributed 15% to the growth of the operating profit (1st half 01/1st half 00). Synergy effects, especially in downstream business, accounted for the remaining 85% of the operating profit growth. The group has demonstrated its ability to generate organic growth and remains our preferred equity in the energy sector. We maintain our BUY code.
The Total Fina Elf Group, the world’s fourth largest oil company, announced its preliminary annual results this morning. They are excellent and in line with its US counterparts. The potential to resist a downturn in the price of Brent crude is positive.
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