Total beats earning forecasts, ponders name change

By Francois de Beaupuy

(Bloomberg) – Total SE bucked the trend of a disappointing fourth quarter for Big Oil, reporting earnings that exceeded expectations and while pledging more cash for cleaner energy.

The results show once again how the French giant has proved more resilient than its peers throughout the downturn caused by the coronavirus pandemic. As its more heavily indebted rivals have stumbled, Total has preserved its dividend and led the way on investments in clean energy.

The company said more than a $2.4bn (R36bn) of its planned net investments of $12bn (R180bn) this year will go into renewables and electricity. That’s an increase of about 20% from 2020.

In a gesture toward the growing importance of cleaner energy, the company proposed changing its name to TotalEnergies.

“The group affirms its plan to transform itself into a broad energy company to meet the dual challenge of the energy transition,” Chief Executive Officer Patrick Pouyanne said in a statement. The name change will give shareholders “the opportunity to endorse this strategy.”

Shares of the company rose 1.5% to 35.69 euros as of 9:04 a.m. in Paris.

Good numbers

Total’s fourth-quarter adjusted net income was $1.3bn (R19.5bn), down 59% from a year earlier but above the average analyst estimate of $1.14bn (R17bn.)

Cash flow was $4.9bn (R73.5bn), down 33% from a year earlier. Oil rose above $60 a barrel in London this week to a one-year high, and at current prices “we generate enough cash flow to cover our investments and dividend,” Pouyanne said.

Big Oil earnings have mostly brought unpleasant surprises. Investors had been expecting a tailwind after crude recovered from last year’s historic lows. But with Covid-19 lockdowns still depressing fuel sales and refining margins, most of the industry was still playing defense, rather than taking advantage of a more favorable market.

Total wasn’t immune to the crisis, reporting lower fourth-quarter earnings in all divisions, from exploration and production, to refining and chemicals, and gas and power.

Yet in crucial metrics, notably gearing, Total was well ahead of its peers. The company’s ratio of net debt to equity was to 21.7% at the end of December, compared with above 30% for some of its European rivals.

“In a quarter of volatile results and disappointing cash flow for the supermajors, Total delivers a good set of numbers,” analysts at Jefferies said in a note.

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