Total Keeps Dividend Stable Despite Drop in Profits

France's Total has kept its dividend stable, it said on May 5, despite reporting a 35% decline in net adjusted profit to $1.78bn. At the same time it announced a plan to reach carbon neutrality by 2050.

The company's cash flow slumped by 31% yr/yr to $4.5bn, which it blamed on a more than 30% decline in oil prices. Total gained from a 5% growth in oil and gas output to over 3mn barrels of oil equivalent/day in the three month period, but weak prices resulted in a 59% drop in its upstream adjusted net operating income to $703mn. It also warned that its full-year output would slide by at least 5% to 2.95-3.00mn boe/d.

Total's operating earnings from refining and chemicals also tumbled 49% at $382mn, while profits from its marketing and services division fell 12% to $302mn. The bright spot was Total's integrated gas, renewables and power business, will boosted income by 54% to $913mn. 

"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 in March, CEO Patrick Pouyanne said.

Total nevertheless announced a 2020 first interim dividend of €0.66 ($0.72)/share, compared with a 2019 final dividend of €0.68/share. Fellow majors BP and ExxonMobil have also maintained their dividends in spite of the crisis, whereas Shell bucked the trend on April 30 by announcing a 66% cut to its payout. 

At the same time, Total has also deepened spending cuts, announcing on May 5 a reduction in net investments to under $14bn in 2020. In March Total said it would invest $15bn this year, versus a February plan of $18bn. However, the company said it would still plough $1.5-2.0bn into low-carbon electricity. BP likewise still plans to invest $500mn on low-carbon activities this year, in spite of the market collapse.

Total intends to lower operating costs by over $1bn, versus a March plan of $800mn, and save more than $1bn in energy costs. The company bolstered its liquidity in April by issuing $3bn in bonds, taking out $5bn in credit lines. It expects to improve its working capital position by $1bn by the end of 2020 compared with a year earlier, assuming oil averages $30/b.