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Total’s Earnings Fell Across Segments, Missed Estimate

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Total SA (TOT) posted its second-quarter results on Thursday. The company’s EPS fell 20% YoY (year-over-year) to $1.0 in the second quarter. Total’s earnings missed analysts’ estimate of $1.1 by about 10%. The company’s revenues fell 2% YoY to $51.2 billion in the second quarter.

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Total’s earnings

Total’s earnings fell across its business segments—E&P (exploration and production), iGRP (integrated gas, renewables, and power), Refining (refining and chemicals), and Marketing (marketing and services).

The company’s E&P adjusted operating earnings fell 13% YoY to $2.0 billion in the second quarter. The fall was due to lower average liquids and gas realizations. However, the company’s overall hydrocarbon output rose 9% YoY due to upstream project startups and ramp-ups.

Total’s adjusted operating earnings in its Refining segment fell from $821 million in the second quarter of 2018 to $715 million in the second quarter. The fall was due to lower refinery throughput and weaker margins. The company’s European Refining variable cost margin fell 19% YoY in the second quarter. Total’s earnings were also impacted by 24% YoY and 12% YoY lower iGRP and Marketing earnings, respectively.

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Peers’ earnings

Suncor Energy’s adjusted EPS rose 10% YoY in the second quarter.

Analysts expect Chevron (CVX) and Royal Dutch Shell’s (RDS.A) EPS to rise 2% YoY and 10% YoY in the second quarter. However, they expect BP (BP), ExxonMobil (XOM), and Petrobras’s EPS to fall 7%, 25%, and 11% YoY, respectively, in the second quarter.

Read Will Chevron Outperform ExxonMobil in Q2? to learn more.

Total’s earning and shareholder returns

Although Total’s earnings fell in the second quarter, the company reiterated its commitment to dividends and buybacks. In the second quarter, the company’s cash outflows toward net share repurchases and dividend payments stood at $0.8 billion and $2.9 billion, respectively.

Total has increased its dividend 3.1% in 2019, which shows a rise of 6.5% since 2007. The company has stayed within its target of increasing the dividend 10% from 2018 to 2020. Total declared its interim dividend of 0.66 euros per share with an ex-dividend date of January 6, 2020.

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Total aims to offset the dilution due to its scrip dividend. Assuming Brent prices at $60 per barrel, Total plans to repurchase $1.5 billion worth of shares in 2019. The buyback will be part of a $5 billion buyback program from 2018 to 2020. The program aims to share the benefits of higher earnings with shareholders.

Peers’ shareholder returns

Currently, Total’s dividend yield is 5.4%.

Royal Dutch Shell, BP, and Eni have higher yields at 5.9%, 6.2%, and 5.9%, respectively.

However, ExxonMobil, Chevron, Equinor, and Suncor Energy have relatively low dividend yields. ExxonMobil and Equinor’s yields are 4.6% and 5.0%. Chevron and Suncor’s yields are 3.8% and 4.0%, respectively.

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