Total net profits dive 96% but less than feared, keeps dividend

PARIS (Reuters) - French energy major Total TOTF.PA reported a 96% fall in second-quarter net profit to $126 million (97.09 million pounds), exceeding expectations for a sharp loss, and said it would maintain its dividend.

FILE PHOTO: The logo of Total is pictured at the company's headquarters in Rueil-Malmaison near Paris, France, April 22, 2020. REUTERS/Charles Platiau/File Photo

All major energy companies have been hard hit by the impact of COVID-19 lockdowns and a collapse in fuel demand, but some have managed to limit the damage as their trading divisions have capitalised on exceptional market volatility.

The market had expected Total to report a net loss for the quarter of around $520 million, the mean estimate of 7 analysts, based on Refinitiv data showed.

Total said its cash flow from operations fell 44% to $3.47 billion, but its adjusted net income was positive and its gearing was under control.

Chairman and Chief Executive Officer Patrick Pouyanne said the cash flow, and reduced spending, would enable Total to maintain a dividend of 0.66 euros ($0.7781) per share, a sustainable level with Brent crude LCOc1 at $40 per barrel, just below its current price.

"These results are driven in particular by the outperformance of trading activities, once again demonstrating the relevance of Total's integrated model," Pouyanne said in a statement. (Graphic: Total reports Q2 net profit dive, maintains dividend - )

Output cuts by the Organization of the Petroleum Exporting Countries and other producers, combined with a pickup in demand, contributed to a rally in the oil market since June.

Still the outlook is uncertain as an upsurge in coronavirus infections raises the likelihood of new lockdown restrictions.

“The oil environment, however, remains volatile, given the uncertainty around the extent and speed of the global economic recovery post-COVID-19,” the company said.

Total’s oil and gas production during the quarter fell 4% to 2.85 million barrels of oil equivalent per day (mboepd).

It trimmed its output forecast for the year to around 2.9-2.95 mboepd from 2.95-3 mboepd.

It also reduced its planned 2020 investments to below $14 billion from $15 billion previously.

Total’s shares were flat by 0714 GMT after opening down 0.8%.

Total said the fall in oil prices in the second quarter would have an impact on long-term liquefied natural gas (LNG) contract prices in the second half of 2020 and it expected significant deferred LNG liftings in the third quarter.

On Wednesday, the group said it would take an $8 billon impairment on the value of its assets, mainly in energy-intensive Canadian oil sands projects.

Reporting by Bate Felix; editing by Barbara Lewis