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Total announces 4Q19 financial results

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As reported by Reuters, Total recorded net adjusted 4Q19 profits of US$3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.

The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to US$2.7 billion.

“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to €0.68 per share.

“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.

Total bought back US$1.75 billion in shares in 2019 ahead of schedule, and plans to buy back US$2 billion more in 2020.

Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of US$7.4 billion, up more than 20% from a year earlier.

“While some peers buckled last week to a synchronised slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.

The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.

LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices have tumbled to around US$55/bbl barrel from last year’s peak in April of almost US$75.

Rivals have seen 4Q19 profits slide on lower prices. BP reported a 26% drop on Tuesday while Shell last month said its profits had halved.

Although Total reported impairments of around US$500 million, it said it was better than rivals because it had no exposure to US shale gas.

“Let me repeat, you will not see Total buying a shale oil company in the US,” Pouyanne told analysts in Aberdeen during the results presentation.

Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.

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