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Total oil group reports record profits

Oil giant Total, France's biggest firm, announced it had made a record 13.9 billion euros in profit thanks to skyrocketing oil prices in 2008.

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AFP - Energy giant Total, France's biggest firm, announced the highest annual net profit in French history on Thursday, after making 13.9 billion euros (18.0 billion dollars) thanks to record oil prices.

Profits began to fall in the fourth quarter of 2008 as the credit crunch hit demand and send crude prices tumbling, but huge earnings in the first three quarters helped the group end the year on an historic high.

"Unprecedented volatility marked the 2008 market environment," said Total chief executive Christophe de Margerie, noting that oil had peaked at about 150 dollars a barrel last year before plunging to as low as 35 dollars.

On average Brent crude traded in London at 97 dollars per barrel over the year, but at only 55 dollars in the last three months of 2008.

"It's wonderful good news, and we need good news," declared Laurence Parisot, head of the French employers' association, in a radio interview. "It's excellent news to see our businesses earning money."

Total's fourth-quarter net profit, adjusted to exclude inventory changes and other one-time items, dropped to 2.87 billion euros from 3.11 billion euros in the same period a year earlier.

And taking into account that some of Total's more inaccessible fields will be unprofitable at low oil prices, changes in inventory valuations meant the group slipped to a net loss in the fourth quarter.

Thus, according to the annual statement, the group slumped to a net loss without adjustments of 794 million euros for this latter period having made a net profit of 3.6 billion euros last year.

"Nevertheless, Total demonstrated in the fourth quarter its strong resistance to the weakened environment," De Margerie insisted, noting that the firm had continued to invest in new fields and exploration contracts.

Fourth-quarter sales fell by 10 percent to 38.71 billion euros from 43.19 billion euros as the world's largest economies fell into recession and demand for fuel and oil derivatives plummeted.

Volatile exchange rates also complicated the picture for a firm that sells crude in dollars but files results in euros.

The dollar fell by seven percent against the euro over the year, despite surging back 14 percent in the fourth quarter.

Shares in Total have declined by around 17 percent over the past six months, as the price of oil has fallen and sentiment has turned on the stock market due to the financial crisis.

Its shares fell 0.8 percent on Wednesday and opened on Thursday down another 0.71 percent at 39.80 euros.
 

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