EXHIBIT 99.2
Press Release
Fourth quarter and full-year 2019 results
Strong cash flow growth in a less favorable environment
Dividend increased by 5% for the year
| 4Q19 | Change vs 4Q18 | 2019 | Change vs 2018 | |||||||||||||
Oil price - Brent ($/b) | 63.1 | -8 | % | 64.2 | -10 | % | ||||||||||
European gas price - NBP ($/Mbtu) | 5.1 | -42 | % | 4.9 | -38 | % | ||||||||||
Adjusted net income (Group share)1 | ||||||||||||||||
- in billions of dollars (B$) | 3.17 | 0 | % | 11.83 | -13 | % | ||||||||||
- in dollars per share | 1.19 | +1 | % | 4.38 | -13 | % | ||||||||||
DACF1(B$) | 7.4 | +21 | % | 28.5 | +9 | % | ||||||||||
Cash Flow from operations (B$) | 6.6 | -38 | % | 24.7 | 0 | % | ||||||||||
Net income (Group share) of 11.3 B$in 2019, a 2% decrease compared to 2018; or 10.1 B€,an increase of 4% compared to 2018
Net-debt-to-capital ratio of 20.7%at December 31, 2019
Hydrocarbon production of 3,014 kboe/din 2019, an increase of 9% compared to 2018
Fourth quarter 2019 dividend set at 0.68 €/share, an increase of 6% compared to 2018
Paris, February 6, 2020 - Total’s Board of Directors met on February 5, 2020, to approve the Group’s 2019 financial statements. Commenting on the results, Chairman and CEO Patrick Pouyanné said:
“The Group reported solid fourth quarter 2019 results with cash flow (DACF) of 7.4 B$, an increase of more than 20% compared to the fourth quarter 2018, and adjusted net income stable at 3.2 B$, despite a lower price environment.
In 2019, the Group generated cash flow of 28.5 B$, strong growth of 2.4 B$ compared to 2018, thanks to a positive contribution from all segments. This performance was achieved despite the drop in oil prices of 10% and European gas prices of 38%, or a price environment down on average by about 20%. The Group reported solid adjusted net operating income for the year of 11.8 B$, a decrease of 13%, and a return on equity above 10%. The Group reduced its organicpre-dividend breakeven to less than 25 $/b.
In the Upstream,start-ups andramp-ups including Yamal LNG in Russia and Ichthys in Australia, Egina in Nigeria and Kaombo in Angola, generated strong cash flow and fueled production growth of 9% for the year, with LNG growth of nearly 50%.
The Exploration & Production segment increased cash flow to 18 B$, despite the deterioration of the environment, and the iGRP segment, with an increase in LNG sales of nearly 60%, generated cash flow of 3.7 B$, an increase of 80%.
The Downstream contributed stable cash flow of 6.6 B$, notably thanks to itsnon-cyclical activities and despite a decrease in refining and petrochemical margins on the order of 10%.
Net investments rose to 17.4 B$ and reflect in particular the strategy to strengthen LNG and deep offshore, as shown by the acquisition of Mozambique LNG and the launching of Arctic LNG 2 in Russia and Mero 2 in Brazil. More thanone-third of the net investments were made in the iGRP segment, which leads the Group’slow-carbon ambition. Total enters the gas and renewables market in India in partnership with Adani and will build a giant 800 MW solar power plant in Qatar.
Total maintains a solid financial position with gearing of 16.7% excluding capitalized leases (20.7% including). In accordance with the decision of the Board of Directors announced on September 24, the Group increased the 2019 final dividend by 6% to €0.68 per share. Including the interim dividends, the full-year 2019 dividend increased by 5% to €2.68 per share. Finally, the Group bought back $1.75 billion of its shares in 2019 and projects 2 B$ of share buybacks in 2020 in a 60 $/b environment.”
| 1 | Definition on page 2 |
1
Key figures2
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars, except effective tax rate, earnings per share and number of shares | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 3,879 | 3,673 | 3,885 | — | Adjusted net operating income from business segments | 14,554 | 15,997 | -9 | % | ||||||||||||||||||||
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| 2,031 | 1,734 | 1,976 | +3 | % | Exploration & Production* | 7,509 | 8,547 | -12 | % | |||||||||||||||||||
| 794 | 574 | 676 | +17 | % | Integrated Gas, Renewables & Power* | 2,389 | 2,419 | -1 | % | |||||||||||||||||||
| 580 | 952 | 900 | -36 | % | Refining & Chemicals | 3,003 | 3,379 | -11 | % | |||||||||||||||||||
| 474 | 413 | 333 | +42 | % | Marketing & Services | 1,653 | 1,652 | — | ||||||||||||||||||||
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| 668 | 521 | 893 | -25 | % | Contribution of equity affiliates to adjusted net income | 2,260 | 3,161 | -29 | % | |||||||||||||||||||
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| 31.8 | % | 30.7 | % | 38.1 | % | Group effective tax rate3 | 34.1 | % | 38.7 | % | ||||||||||||||||||
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| 3,165 | 3,017 | 3,164 | — | Adjusted net income (Group share) | 11,828 | 13,559 | -13 | % | ||||||||||||||||||||
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| 1.19 | 1.13 | 1.17 | +1 | % | Adjusted fully-diluted earnings per share (dollars)4 | 4.38 | 5.05 | -13 | % | |||||||||||||||||||
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| 1.07 | 1.01 | 1.02 | +5 | % | Adjusted fully-diluted earnings per share (euros)** | 3.92 | 4.27 | -8 | % | |||||||||||||||||||
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| 2,607 | 2,614 | 2,637 | -1 | % | Fully-diluted weighted-average shares (millions) | 2,618 | 2,624 | — | ||||||||||||||||||||
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| 2,600 | 2,800 | 1,132 | ×2.3 | Net income (Group share) | 11,267 | 11,446 | -2 | % | ||||||||||||||||||||
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| 4,291 | 3,296 | 4,459 | -4 | % | Organic investments5 | 13,397 | 12,427 | +8 | % | |||||||||||||||||||
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| (80 | ) | 3,422 | (1,751 | ) | ns | Net acquisitions6 | 4,052 | 3,141 | +29 | % | ||||||||||||||||||
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| 4,211 | 6,718 | 2,708 | +56 | % | Net investments7 | 17,449 | 15,568 | +12 | % | |||||||||||||||||||
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| 6,839 | 6,853 | 5,672 | +21 | % | Operating cash flow before working capital changes8 | 26,432 | 24,529 | +8 | % | |||||||||||||||||||
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| 7,372 | 7,385 | 6,095 | +21 | % | Operating cash flow before working capital changes w/o financial charges (DACF)9 | 28,501 | 26,067 | +9 | % | |||||||||||||||||||
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| 6,599 | 8,206 | 10,640 | -38 | % | Cash flow from operations | 24,685 | 24,703 | — | ||||||||||||||||||||
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2019 data take into account the impact of the new rule IFRS16 “Leases”, effective January 1, 2019.
| * | 4Q18 and 2018 restated; historical data for 2017 and 2018 available onwww.total.com. |
| ** | Average €-$ exchange rate: 1.1071 in the fourth quarter 2019 and 1.1195 in 2019. |
Highlights since the beginning of the fourth quarter 201910
| • | Started production at giant Johan Sverdrup field in the North Sea and Iara in Brazil |
| • | Launched Anchor projects and engineering studies for North Platte in Gulf of Mexico |
| • | Agreement between NOC and Total on participation in Waha concession in Libya |
| • | Extended Block 17 licenses to 2045 in Angola |
| • | Acquired two offshore discoveries (Blocks20-21) in Angola for potential development |
| • | Signed an agreement to sell interest in Brunei offshore block CA1 |
| • | Expanded in Brazilpre-salt with new deep-offshore exploration block |
| • | Acquired 50% interest in Surinam Block 58 with significant MakaCentral-1 discovery |
| • | Awarded construction of a large-scale (800 MW) solar power plant in Qatar |
| • | Sold to Banque des Territoires a 50% interest in a portfolio of solar and wind assets in France |
| • | Doubled production capacity of recycled polypropylene for auto market from Synova subsidiary |
| • | Alliance with Zhejiang Energy Group to developlow-sulfur maritime fuel market in China |
| • | Second agreement to supplyCMA-CGM with LNG maritime fuel from Marseille |
| 2 | Adjusted results are defined as income using replacement cost, adjusted for special items, excluding the impact of changes for fair value; adjustment items are on page 12. |
| 3 | Tax on adjusted net operating income / (adjusted net operating income – income from equity affiliates – dividends received from investments – impairment of goodwill + tax on adjusted net operating income). |
| 4 | In accordance with IFRS rules, adjusted fully-diluted earnings per share is calculated from the adjusted net income less the interest on the perpetual subordinated bond |
| 5 | Organic investments = net investments excluding acquisitions, asset sales and other operations with non-controlling interests. |
| 6 | Net acquisitions = acquisitions – assets sales – other transactions with non-controlling interests (see page 12). |
| 7 | Net investments = Organic investments + net acquisitions (see page 12). |
| 8 | Operating cash flow before working capital changes, is defined as cash flow from operating activities before changes in working capital at replacement cost, and effective second quarter 2019 including organic loan repayments from equity affiliates. The inventory valuation effect is explained on page 15. The reconciliation table for different cash flow figures is on page 13. |
| 9 | DACF = debt adjusted cash flow, is defined as operating cash flow before working capital changes and financial charges. |
| 10 | Certain transactions referred to in the highlights are subject to approval by authorities or to other conditions as per the agreements. |
2
| • | Awarded concession to install and operate up to 20,000 new EV charging points in Metropolitan Region of Amsterdam |
| • | Dedicated 400 M$ to Total venture capital fund to support carbon neutrality |
Key figures of environment and Group production
| > | Environment* – liquids and gas price realizations**, refining margins |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | 2019 | 2018 | 2019 vs 2018 | ||||||||||||||||||||||
| 63.1 | 62.0 | 68.8 | -8 | % | Brent ($/b) | 64.2 | 71.3 | -10 | % | |||||||||||||||||||
| 2.4 | 2.3 | 3.7 | -35 | % | Henry Hub ($/Mbtu) | 2.5 | 3.1 | -18 | % | |||||||||||||||||||
| 5.1 | 3.9 | 8.8 | -42 | % | NBP ($/Mbtu) | 4.9 | 7.9 | -38 | % | |||||||||||||||||||
| 5.8 | 4.7 | 9.9 | -42 | % | JKM ($/Mbtu) | 5.5 | 9.7 | -44 | % | |||||||||||||||||||
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| 59.1 | 58.0 | 59.2 | — | Average price of liquids ($/b)** | 59.8 | 64.3 | -7 | % | ||||||||||||||||||||
| 3.76 | 3.48 | 5.01 | -25 | % | Average price of gas ($/Mbtu)** | 3.88 | 4.87 | -20 | % | |||||||||||||||||||
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| 30.2 | 47.4 | 40.8 | -26 | % | Variable cost margin - Refining Europe, VCM ($/t) | 34.9 | 38.2 | -9 | % | |||||||||||||||||||
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| * | The indicators are shown on page 16. |
| ** | Consolidated subsidiaries. |
| > | Production* |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | 2019 | 2018 | 2019 vs 2018 | ||||||||||||||||||||||
| 3,113 | 3,040 | 2,876 | +8 | % | Hydrocarbon production (kboe/d) | 3,014 | 2,775 | +9 | % | |||||||||||||||||||
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| 1,452 | 1,441 | 1,382 | +5 | % | Oil (including bitumen) (kb/d) | 1,431 | 1,378 | +4 | % | |||||||||||||||||||
| 1,661 | 1,599 | 1,493 | +11 | % | Gas (including condensates and associated NGL) (kboe/d) | 1,583 | 1,397 | +13 | % | |||||||||||||||||||
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| 3,113 | 3,040 | 2,876 | +8 | % | Hydrocarbon production (kboe/d) | 3,014 | 2,775 | +9 | % | |||||||||||||||||||
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| 1,714 | 1,720 | 1,589 | +8 | % | Liquids (kb/d) | 1,672 | 1,566 | +7 | % | |||||||||||||||||||
| 7,263 | 7,399 | 6,994 | +4 | % | Gas (Mcf/d) | 7,364 | 6,599 | +12 | % | |||||||||||||||||||
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| * | Group production = EP production + iGRP production. |
Hydrocarbon production was 3,113 thousand barrels of oil equivalent (kboe/d) in the fourth quarter 2019, an increase of 8% compared to last year, due to:
| • | +13% related to thestart-up andramp-up of new projects, including Yamal LNG in Russia, Egina in Nigeria, Ichthys in Australia, Kaombo in Angola, Culzean in the United Kingdom and Johan Sverdrup in Norway. |
| • | -3% due to the natural decline of the fields. |
| • | -2% due to maintenance and Tyra redevelopment project in Denmark. |
Hydrocarbon production was 3,014 kboe/d for the year 2019, an increase of 9% compared to 2018, due to:
| • | +13% related to thestart-up andramp-up of new projects, including Yamal LNG in Russia, Egina in Nigeria, Ichthys in Australia, Kaombo in Angola, Culzean in the United Kingdom and Johan Sverdrup in Norway. |
| • | -3% due to the natural decline of the fields. |
| • | -1% due to maintenance, notably in Nigeria, Norway and Tyra redevelopment project in Denmark. |
3
Analysis of business segments
Exploration & Production (EP – redefined scope)
| > | Production |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Hydrocarbon production | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 2,489 | 2,501 | 2,408 | +3 | % | EP (kboe/d) | 2,454 | 2,394 | +3 | % | |||||||||||||||||||
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| 1,640 | 1,647 | 1,541 | +6 | % | Liquids (kb/d) | 1,601 | 1,527 | +5 | % | |||||||||||||||||||
| 4,624 | 4,654 | 4,710 | -2 | % | Gas (Mcf/d) | 4,653 | 4,724 | -2 | % | |||||||||||||||||||
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| > | Results |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars, except effective tax rate | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 2,031 | 1,734 | 1,976 | +3 | % | Adjusted net operating income* | 7,509 | 8,547 | -12 | % | |||||||||||||||||||
| 247 | 297 | 269 | -8 | % | including income from equity affiliates | 996 | 1,140 | -13% | ||||||||||||||||||||
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| 38.0 | % | 39.7 | % | 41.2 | % | Effective tax rate** | 41.5 | % | 46.2 | % | ||||||||||||||||||
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| 2,617 | 2,065 | 2,765 | -5 | % | Organic investments | 8,635 | 7,953 | +9 | % | |||||||||||||||||||
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| (224 | ) | (3 | ) | (143 | ) | ns | Net acquisitions | 14 | 2,162 | -99 | % | |||||||||||||||||
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| 2,393 | 2,061 | 2,622 | -9 | % | Net investments | 8,649 | 10,115 | -14 | % | |||||||||||||||||||
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| 4,451 | 4,451 | 3,911 | +14 | % | Operating cash flow before working capital changes *** | 18,030 | 17,832 | +1 | % | |||||||||||||||||||
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| 4,206 | 5,007 | 6,310 | -33 | % | Cash flow from operations *** | 16,917 | 18,537 | -9 | % | |||||||||||||||||||
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| * | Details on adjustment items are shown in the business segment information annex to financial statements. |
| ** | Tax on adjusted net operating income / (adjusted net operating income - income from equity affiliates - dividends received from investments - impairment of goodwill + tax on adjusted net operating income). |
| *** | Excluding financial charges, except those related to leases. |
Exploration & Production adjusted net operating income was:
| • | 2,031 M$ in the fourth quarter 2019, an increase of 3%year-on-year driven by the increase in production. |
| • | 7,509 M$ for 2019, a decrease of 12% linked to lower Brent and gas prices. |
Operating cash flow before working capital changes was 4.5 B$ in the fourth quarter, an increase of 14% compared to last year, and 18.0 B$ in 2019 an increase of 1% compared to 2018. Thestart-up of strong cash flow generating projects offset the impact of lower Brent and gas prices.
4
Integrated Gas, Renewables & Power (iGRP)
| > | Production and liquefied natural gas (LNG) sales |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Hydrocarbon production | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 624 | 539 | 468 | +34 | % | iGRP (kboe/d) | 560 | 381 | +47 | % | |||||||||||||||||||
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| 74 | 73 | 48 | +54 | % | Liquids (kb/d) | 71 | 39 | +82 | % | |||||||||||||||||||
| 2,639 | 2,745 | 2,284 | +16 | % | Gas (Mcf/d) | 2,711 | 1,875 | +45 | % | |||||||||||||||||||
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4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Liquefied Natural Gas in Mt | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 10.6 | 7.4 | 7.9 | +35 | % | Overall LNG sales | 34.3 | 21.8 | +57 | % | |||||||||||||||||||
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| 4.2 | 4.2 | 3.3 | +28 | % | incl. Sales from equity production* | 16.3 | 11.1 | +47 | % | |||||||||||||||||||
| 9.6 | 5.5 | 6.7 | +44 | % | incl. Sales by Total from equity production and third party purchases | 27.9 | 17.1 | +63 | % | |||||||||||||||||||
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| * | The Group’s equity production may be sold by Total or by the joint ventures. |
Production growth over the year was essentially linked to thestart-up of Ichthys in Australia in the third quarter 2018 and the successivestart-ups of Yamal LNG trains in Russia.
In the fourth quarter 2019, LNG sales increased by 35%year-on-year thanks to theramp-up of Yamal LNG and Ichthys plus thestart-up of the first Cameron LNG train in the US.
In 2019, LNG sales increased by 57% compared to 2018 for the same reasons and also due to the acquisition of the Engie portfolio of LNG contracts in the third quarter 2018.
| > | Results |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 794 | 574 | 676 | +17 | % | Adjusted net operating income* | 2,389 | 2,419 | -1 | % | |||||||||||||||||||
| 353 | 206 | 447 | -21 | % | including income from equity affiliates | 1,009 | 1,249 | -19 | % | |||||||||||||||||||
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| 684 | 641 | 614 | +11 | % | Organic investments | 2,259 | 1,745 | +30 | % | |||||||||||||||||||
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| (13 | ) | 3,375 | (1,346 | ) | ns | Net acquisitions | 3,921 | 1,701 | x2.3 | |||||||||||||||||||
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| 671 | 4,015 | (733 | ) | ns | Net investments | 6,180 | 3,445 | +79 | % | |||||||||||||||||||
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| 1,402 | 848 | 617 | x2.3 | Operating cash flow before working capital changes ** | 3,730 | 2,055 | +81 | % | ||||||||||||||||||||
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| 1,527 | 401 | 434 | x3.5 | Cash flow from operations ** | 3,461 | 596 | x5.8 | |||||||||||||||||||||
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| * | Detail of adjustment items shown in the business segment information annex to financial statements. |
| ** | Excluding financial charges, except those related to leases. |
Driven by strong LNG sales growth, operating cash flow before working capital changes for the iGRP segment more than doubled in the fourth quarter 2019 and increased by 81% in 2019.
Adjusted net operating income was 794 M$ in the fourth quarter 2019, an increase of 17%, and 2,389 M$ in 2019, a decrease of 1%, impacted by lower gas prices in Europe and Asia as well as higher DD&A expenses on new projects.
5
Downstream (Refining & Chemicals and Marketing & Services)
| > | Results |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 1,054 | 1,365 | 1,233 | -15 | % | Adjusted net operating income* | 4,656 | 5,031 | -7 | % | |||||||||||||||||||
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| 949 | 569 | 1,039 | -9 | % | Organic investments | 2,395 | 2,614 | -8 | % | |||||||||||||||||||
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| 159 | 52 | (264 | ) | ns | Net acquisitions | 118 | (722 | ) | ns | |||||||||||||||||||
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| 1,108 | 622 | 775 | +43 | % | Net investments | 2,513 | 1,892 | +33 | % | |||||||||||||||||||
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| 1,505 | 1,995 | 1,776 | -15 | % | Operating cash flow before working capital changes ** | 6,617 | 6,544 | +1 | % | |||||||||||||||||||
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| 1,420 | 3,058 | 4,306 | -67 | % | Cash flow from operations ** | 6,441 | 7,067 | -9 | % | |||||||||||||||||||
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| * | Detail of adjustment items shown in the business segment information annex to financial statements. |
| ** | Excluding financial charges, except those related to leases. |
Refining & Chemicals
| > | Refinery throughput and utilization rates* |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | 2019 | 2018 | 2019 vs 2018 | ||||||||||||||||||||||
| 1,509 | 1,719 | 1,886 | -20 | % | Total refinery throughput (kb/d) | 1,671 | 1,852 | -10 | % | |||||||||||||||||||
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| 282 | 503 | 591 | -52 | % | France | 456 | 610 | -25 | % | |||||||||||||||||||
| 756 | 757 | 809 | -7 | % | Rest of Europe | 754 | 755 | — | ||||||||||||||||||||
| 471 | 459 | 486 | -3 | % | Rest of world | 462 | 487 | -5 | % | |||||||||||||||||||
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| 71 | % | 82 | % | 90 | % | Utlization rate based on crude only** | 80 | % | 88 | % | ||||||||||||||||||
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| * | Includes refineries in Africa reported in the Marketing & Services segment. |
| ** | Based on distillation capacity at the beginning of the year. |
Refinery throughput volumes:
| • | decreased by 20% in the fourth quarter 2019year-on-year, due notably to strikes in France and planned maintenance at Normandy as well as a fire that affected the distillation unit. |
| • | decreased by 10% in 2019 notably due to the shutdown for nearly 6 months of Grandpuits in France. |
| > | Results |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 580 | 952 | 900 | -36 | % | Adjusted net operating income* | 3,003 | 3,379 | -11 | % | |||||||||||||||||||
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| 479 | 354 | 615 | -22 | % | Organic investments | 1,426 | 1,604 | -11 | % | |||||||||||||||||||
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| 118 | 19 | (429 | ) | ns | Net acquisitions | (44 | ) | (742 | ) | ns | ||||||||||||||||||
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| 597 | 374 | 186 | x3.2 | Net investments | 1,382 | 862 | +60 | % | ||||||||||||||||||||
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| 789 | 1,373 | 1,276 | -38 | % | Operating cash flow before working capital changes ** | 4,072 | 4,388 | -7 | % | |||||||||||||||||||
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| 1,142 | 1,575 | 3,080 | -63 | % | Cash flow from operations ** | 3,837 | 4,308 | -11 | % | |||||||||||||||||||
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| * | Detail of adjustment items shown in the business segment information annex to financial statements. |
| ** | Excluding financial charges, except those related to leases. |
Adjusted net operating income for the Refining & Chemicals segment decreased by 36% to 580 M$ in the fourth quarter 2019 and by 11% in 2019 to 3,003 M$, notably due to a decrease of around 10% in refining and petrochemical margins as well as lower throughput.
Operating cash flow before working capital changes was 789 M$ in the fourth quarter 2019 and 4,072 M$ in 2019, a decrease of 38% and 7%, respectively, compared to 2018, for the same reasons.
6
Marketing & Services
| > | Petroleum product sales |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Sales in kb/d* | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 1,835 | 1,848 | 1,786 | +3 | % | Total Marketing & Services sales | 1,845 | 1,801 | +2 | % | |||||||||||||||||||
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| 1,033 | 1,034 | 986 | +5 | % | Europe | 1,021 | 1,001 | +2 | % | |||||||||||||||||||
| 801 | 814 | 800 | — | Rest of world | 824 | 800 | +3 | % | ||||||||||||||||||||
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| * | Excludes trading and bulk refining sales |
Sales of petroleum products increased by 2% in 2019, thanks notably to business development in the African and American regions, notably Mexico and Brazil.
| > | Results |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 474 | 413 | 333 | +42 | % | Adjusted net operating income* | 1,653 | 1,652 | — | ||||||||||||||||||||
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| 471 | 215 | 424 | +11 | % | Organic investments | 969 | 1,010 | -4 | % | |||||||||||||||||||
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| 40 | 33 | 165 | -75 | % | Net acquisitions | 162 | 20 | x8.2 | ||||||||||||||||||||
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| 511 | 248 | 589 | -13 | % | Net investments | 1,131 | 1,030 | +10 | % | |||||||||||||||||||
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| 716 | 622 | 500 | +43 | % | Operating cash flow before working capital changes ** | 2,546 | 2,156 | +18 | % | |||||||||||||||||||
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| 278 | 1,483 | 1,226 | -77 | % | Cash flow from operations ** | 2,604 | 2,759 | -6 | % | |||||||||||||||||||
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| * | Detail of adjustment items shown in the business segment information annex to financial statements. |
| ** | Excluding financial charges, except those related to leases |
Adjusted net operating income was 474 M$ in the fourth quarter 2019, an increase of 42%, notably due to a revaluation of futures contracts. Adjusted net operating income was 1,653 M$ in 2019.
Operating cash flow before working capital changes was 716 M$ in the fourth quarter 2019 and 2,546 M$ in 2019, an increase of 43% and 18%, respectively, compared to 2018.
Group results
| > | Adjusted net operating income from business segments |
Adjusted net operating income from the business segments was:
| • | 3,879 M$ in the fourth quarter 2019, stable compared to last year, with lower Brent, natural gas prices and refining margins offset by the increase in production. |
| • | 14,554 M$ in 2019, down 9% compared to last year due to the decreases in Brent, natural gas prices and refining and petrochemical margins. |
| > | Adjusted net income (Group share) |
Adjusted net income (Group share) was:
| • | 3,165 M$ in the fourth quarter 2019, stable compared to last year thanks to the stable adjusted net operating income of the segments. |
| • | 11,828 M$ in 2019, down 13% compared to last year due to the decrease in adjusted net operating income of the segments. |
Adjusted net income excludes theafter-tax inventory effect, special items and the impact of effects of changes in fair value11.
Total net income adjustments12 were:
| • | -565 M$ in the fourth quarter 2019, including-248 M$ of impairments. |
| • | -561 M$ in 2019, including-465 M$ of impairments. |
| 11 | Adjustment items shown on page 12. |
| 12 | Details shown on page 12 and in the annex to the financial statements. |
7
The limited level of 2019 impairments reflects the resilience of the portfolio on a long-term price trajectory in line with the IEA Sustainable Development Scenario (SDS) and which forecasts by 2050 a convergence of the oil price toward 50$2018/b.
The effective tax rate for the Group was:
| • | 31.8% in the fourth quarter 2019, compared to 38.1% the same quarter last year, due to the lower tax rate for the Upstream linked to the lower hydrocarbon prices as well as for the Downstream. |
| • | 34.1% in 2019 compared to 38.7% in 2018 for the same reasons. |
| > | Adjusted fully-diluted earnings per share |
Adjusted earnings per share was:
| • | $1.19 in the fourth quarter 2019, an increase of 1%, calculated on the basis of a weighted average of 2,607 million fully-diluted shares, compared to $1.17 in the fourth quarter 2018. |
| • | $4.38 in 2019, a decrease of 13%, calculated on the basis of a weighted average of 2,618 million fully-diluted shares, compared to $5.05 in 2018. |
In the framework of the shareholder return policy announced in February 2018, the Group has continued to buy back shares, including:
| • | the buyback of 16.1 million shares, representing all shares issued in 2019 under the scrip dividend option until it was terminated. |
| • | the buyback of additional shares: 11.1 million shares repurchased in the fourth quarter 2019 for 0.60 B$ and 32.7 million shares in 2019 for 1.75 B$ as part of the 5 B$ buyback program for2018-20. |
The number of fully-diluted shares was 2,603 million on December 31, 2019.
| > | Acquisitions - asset sales |
Acquisitions were:
| • | 277 M$ in the fourth quarter 2019. |
| • | 5,991 M$ in 2019, linked notably to the acquisition of Anadarko’s interest in Mozambique LNG, the signing of the acquisition of a 10% stake in the Arctic LNG 2 projects in Russia and the acquisition of Chevron’s interest in the Danish Underground Consortium in Denmark. |
Asset sales were:
| • | 357 M$ in the fourth quarter 2019. |
| • | 1,939 M$ in 2019, linked notably to the payment received with the take-over of the Toshiba LNG portfolio in the United States, the sale of the interest in the Wepec refinery in China, the sale of the Group’s interest in the Hazira terminal in India and polystyrene activities in China. |
| > | Net cash flow |
Net cash flow13 for the Group was:
| • | 2,628 M$ in the fourth quarter 2019. |
| • | 8,983 M$ in 2019, stable compared to 2018. |
| > | Profitability |
The return on equity was 10.4% for the twelve months ended December 31, 2019.
In millions of dollars | January 1, 2019 December 31, 2019 | October 1, 2018 September 30, 2019 | January 1, 2018 December 31, 2018 | |||||||||
Adjusted net income | 12,090 | 12,104 | 13,964 | |||||||||
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| |||||||
Average adjusted shareholders’ equity | 116,766 | 117,037 | 114,183 | |||||||||
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Return on equity (ROE) | 10.4 | % | 10.3 | % | 12.2 | % | ||||||
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| 13 | Net cash flow = operating cash flow before working capital changes - net investments (including other transactions withnon-controlling interests). |
8
The return on average capital employed was 9.8% for the twelve months ended December 31, 2019.
In millions of dollars | January 1, 2019 December 31, 2019 | October 1, 2018 September 30, 2019 | January 1, 2018 December 31, 2018 | |||||||||
Adjusted net operating income | 14,073 | 14,094 | 15,691 | |||||||||
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Average capital employed | 143,674 | 146,222 | 133,123 | |||||||||
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ROACE | 9.8 | % | 9.6 | % | 11.8 | % | ||||||
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Total S.A. accounts
Net income for Total S.A., the parent company, was 7,039 million euros in 2019 compared to 5,485 million euros in 2018.
9
2020 Sensitivities*
| Change | Estimated impact on adjusted net operating income | Estimated impact on cash flow from operations | ||||
Dollar | +/- 0.1 $ per € | -/+ 0.1 B$ | ~0 B$ | |||
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|
| ||||
Average liquids price** | +/- 10 $/b | +/- 2.9 B$ | +/- 3.3 B$ | |||
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| ||||
European gas price - NBP ($/Mbtu) | +/- 1 $/Mbtu | +/- 0.35 B$ | +/- 0.35 B$ | |||
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| ||||
Variable cost margin, European refining (VCM) | +/- 10 $/t | +/- 0.5 B$ | +/- 0.6 B$ | |||
|
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|
| * | Sensitivities are revised once per year upon publication of the previous year’s fourth quarter results. Sensitivities are estimates based on assumptions about the Group’s portfolio in 2020. Actual results could vary significantly from estimates based on the application of these sensitivities. The impact of the $-€ sensitivity on adjusted net operating income is essentially attributable to Refining & Chemicals. |
| ** | In a 60 $/b Brent environment. |
Summary and outlook
The environment remains volatile, given the uncertainty about hydrocarbon demand related to the outlook for global economic growth and a context of geopolitical instability.
The Group has strong capacity to generate cash flow and, in a 60 $/b environment, expects to increase it by approximately 1 B$ per year starting from 2019.
The Group will continue to implement its strategy for profitable growth on the integrated gas andlow-carbon electricity chains. LNG sales will benefit notably in 2020 from thestart-ups of Yamal LNG train 4 as well as Cameron LNG train 3 and be more than 30 Mt/y.
Spending discipline is maintained and the Group continues its cost reduction program with an objective of more than 5 B$ in cumulative savings in 2020. Net investments in 2020 should be on the order of 18 B$, and the Group will complete its 5 B$ asset sale program over the years2019-20 (~3 B$ already announced).
Organic production growth should be more than 2% in 2020, thanks toramp-ups of projects started in 2019 and expectedstart-ups in 2020, notably Iara 2 in Brazil.
Since the start of the fourth quarter, global refining margins are weak as a result of high product inventories and oil prices supported by OPEC. The Downstream will continue to rely on its diversified portfolio, notably its integrated platforms in Refining & Chemicals as well as itsnon-cyclical businesses.
Taking into account the strong visibility on cash flow, the Group will continue to increase the dividend with a guidance of5-6% per year. It will also continue to buy back shares, with an amount expected for 2020 of 2.0 B$ in a 60 $/b environment.
• • •
To listen to the presentation in English by CEO Patrick Pouyanné and CFO Jean-Pierre Sbraire today at 10:30 (London time) please log on to total.com or call +44 (0) 207 192 8000 in Europe or +1 866 966 1396 in the United States (code: 2072029). For a replay, please consult the website or call +44 (0) 333 300 9785 in Europe or +1 866 331 1332 in the United States (code: 2072029).
* * * * *
Total contacts
Media Relations: +33 1 47 44 46 99 lpresse@total.com l @TotalPress
Investors Relations: +44 (0) 207 719 7962 lir@total.com
10
Operating information by segment
| > | Group production (Exploration & Production + iGRP) |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Combined liquids and gas production by region (kboe/d) | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 1,102 | 1,004 | 997 | +11 | % | Europe and Central Asia | 1,023 | 909 | +13 | % | |||||||||||||||||||
| 703 | 733 | 661 | +6 | % | Africa | 705 | 670 | +5 | % | |||||||||||||||||||
| 701 | 720 | 655 | +7 | % | Middle East and North Africa | 702 | 666 | +6 | % | |||||||||||||||||||
| 368 | 363 | 386 | -5 | % | Americas | 365 | 389 | -6 | % | |||||||||||||||||||
| 239 | 221 | 176 | +36 | % | Asia-Pacific | 219 | 141 | +55 | % | |||||||||||||||||||
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| 3,113 | 3,040 | 2,876 | +8 | % | Total production | 3,014 | 2,775 | +9 | % | |||||||||||||||||||
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| 768 | 698 | 699 | +10 | % | includes equity affiliates | 731 | 671 | +9 | % | |||||||||||||||||||
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4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Liquids production by region (kb/d) | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 373 | 367 | 363 | +3 | % | Europe and Central Asia | 355 | 334 | +6 | % | |||||||||||||||||||
| 560 | 583 | 509 | +10 | % | Africa | 558 | 513 | +9 | % | |||||||||||||||||||
| 560 | 562 | 503 | +11 | % | Middle East and North Africa | 548 | 520 | +5 | % | |||||||||||||||||||
| 171 | 163 | 191 | -11 | % | Americas | 168 | 183 | -8 | % | |||||||||||||||||||
| 50 | 44 | 22 | x2.2 | Asia-Pacific | 44 | 16 | x2.7 | |||||||||||||||||||||
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| 1,714 | 1,720 | 1,589 | +8 | % | Total production | 1,672 | 1,566 | +7 | % | |||||||||||||||||||
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| |||||||||||||||
| 212 | 210 | 231 | -8 | % | includes equity affiliates | 216 | 247 | -13 | % | |||||||||||||||||||
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4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Gas production by region (Mcf/d) | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 3,887 | 3,431 | 3,416 | +14 | % | Europe and Central Asia | 3,596 | 3,100 | +16 | % | |||||||||||||||||||
| 904 | 768 | 738 | +22 | % | Africa | 792 | 785 | +1 | % | |||||||||||||||||||
| 792 | 866 | 843 | -6 | % | Middle East and North Africa | 857 | 806 | +6 | % | |||||||||||||||||||
| 1,109 | 1,124 | 1,094 | +1 | % | Americas | 1,110 | 1,160 | -4 | % | |||||||||||||||||||
| 571 | 1,210 | 903 | -37 | % | Asia-Pacific | 1,009 | 748 | +35 | % | |||||||||||||||||||
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| |||||||||||||||
| 7,263 | 7,399 | 6,994 | +4 | % | Total production | 7,364 | 6,599 | +12 | % | |||||||||||||||||||
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| |||||||||||||||
| 3,179 | 2,635 | 2,524 | +26 | % | includes equity affiliates | 2,834 | 2,281 | +24 | % | |||||||||||||||||||
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| |||||||||||||||
| > | Downstream (Refining & Chemicals and Marketing & Services) |
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | Petroleum product sales by region (kb/d) | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 1,993 | 1,999 | 2,062 | -3 | % | Europe | 2,008 | 1,984 | +1 | % | |||||||||||||||||||
| 737 | 677 | 778 | -5 | % | Africa | 706 | 736 | -4 | % | |||||||||||||||||||
| 763 | 920 | 767 | — | Americas | 842 | 827 | +2 | % | ||||||||||||||||||||
| 526 | 541 | 531 | -1 | % | Rest of world | 555 | 606 | -8 | % | |||||||||||||||||||
|
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|
| |||||||||||||||
| 4,019 | 4,136 | 4,138 | -3 | % | Total consolidated sales | 4,110 | 4,153 | -1 | % | |||||||||||||||||||
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| |||||||||||||||
| 508 | 544 | 593 | -14 | % | Includes bulk sales | 536 | 575 | -7 | % | |||||||||||||||||||
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| |||||||||||||||
| 1,676 | 1,745 | 1,759 | -5 | % | Includes trading | 1,730 | 1,777 | -3 | % | |||||||||||||||||||
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| |||||||||||||||
11
Adjustment items to net income (Group share)
4Q19 | 3Q19 | 4Q18 | In millions of dollars | 2019 | 2018 | |||||||||||||||
| (666 | ) | (156 | ) | (1,026 | ) | Special items affecting net income (Group share) | (892 | ) | (1,731 | ) | ||||||||||
|
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| |||||||||||
| — | — | (2 | ) | Gain (loss) on asset sales | — | (16 | ) | |||||||||||||
| (5 | ) | (20 | ) | (32 | ) | Restructuring charges | (58 | ) | (138 | ) | ||||||||||
| (248 | ) | (160 | ) | (1,259 | ) | Impairments | (465 | ) | (1,595 | ) | ||||||||||
| (413 | ) | 24 | 267 | Other | (369 | ) | 18 | |||||||||||||
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| |||||||||||
| 57 | (71 | ) | (1,052 | ) | After-tax inventory effect : FIFO vs. replacement cost | 346 | (420 | ) | ||||||||||||
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| |||||||||||
| 44 | 10 | 46 | Effect of changes in fair value | (15 | ) | 38 | ||||||||||||||
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|
| |||||||||||
| (565 | ) | (217 | ) | (2,032 | ) | Total adjustments affecting net income | (561 | ) | (2,113 | ) | ||||||||||
|
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| |||||||||||
Investments - Divestments
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 4,291 | 3,296 | 4,459 | -4 | % | Organic investments (a) | 13,397 | 12,427 | +8 | % | |||||||||||||||||||
| 136 | 152 | 306 | -56 | % | capitalized exploration | 705 | 711 | -1 | % | |||||||||||||||||||
| 319 | 242 | 160 | +99 | % | increase innon-current loans | 1,061 | 618 | +72 | % | |||||||||||||||||||
| (102 | ) | (61 | ) | (382 | ) | ns | repayment ofnon-current loans, excluding organic loan repayment from equity affiliates* | (551 | ) | (2,067 | ) | ns | ||||||||||||||||
| — | (109 | ) | — | ns | change in debt from renewable projects (Group share) | (109 | ) | — | ns | |||||||||||||||||||
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|
| |||||||||||||||
| 266 | 4,429 | 349 | -24 | % | Acquisitions (b) | 5,980 | 7,692 | -22 | % | |||||||||||||||||||
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| 357 | 1,007 | 2,101 | -83 | % | Asset sales (c) | 1,939 | 5,172 | -63 | % | |||||||||||||||||||
| — | 105 | — | ns | change in debt from renewable projects (partner share) | 105 | — | ns | |||||||||||||||||||||
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| (11 | ) | — | (1 | ) | ns | Other transactions withnon-controlling interests (d) | (11 | ) | (622 | ) | ns | |||||||||||||||||
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| 4,211 | 6,718 | 2,708 | +55 | % | Net investments (a + b - c - d) | 17,449 | 15,568 | +12 | % | |||||||||||||||||||
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| (275 | ) | (101 | ) | — | ns | Organic loan repayment from equity affiliates* (e) | (475 | ) | — | ns | ||||||||||||||||||
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| — | 214 | — | ns | Change in debt from renewable projects financing ** (f) | 214 | — | ns | |||||||||||||||||||||
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| 3,925 | 6,831 | 2,707 | +45 | % | Cash flow used in investing activities (a + b - c + e + f) | 17,177 | 14,946 | +15 | % | |||||||||||||||||||
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| * | Effective second quarter 2019, organic loan repayments from equity affiliates are defined as loan repayments from equity affiliates coming from their cash flow from operations. |
| ** | Change in debt from renewable projects (Group share and partner share). |
12
Cash flow
4Q19 | 3Q19 | 4Q18 | 4Q19 vs 4Q18 | In millions of dollars | 2019 | 2018 | 2019 vs 2018 | |||||||||||||||||||||
| 7,372 | 7,385 | 6,095 | +21 | % | Operating cash flow before working capital changes w/o financials charges (DACF) | 28,501 | 26,067 | +9 | % | |||||||||||||||||||
| (533 | ) | (532 | ) | (423 | ) | ns | Financial charges | (2,069 | ) | (1,538 | ) | ns | ||||||||||||||||
| 6,839 | 6,853 | 5,672 | +21 | % | Operating cash flow before working capital changes (a) | 26,432 | 24,529 | +8 | % | |||||||||||||||||||
| 46 | 1,523 | 6,425 | -99 | % | (Increase) decrease in working capital | (1,718 | ) | 769 | ns | |||||||||||||||||||
| (11 | ) | (69 | ) | (1,457 | ) | ns | Inventory effect | 446 | (595 | ) | ns | |||||||||||||||||
| (275 | ) | (101 | ) | — | ns | Organic loan repayment from equity affiliates | (475 | ) | — | ns | ||||||||||||||||||
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| 6,599 | 8,206 | 10,640 | -38 | % | Cash flow from operations | 24,685 | 24,703 | — | ||||||||||||||||||||
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| 4,291 | 3,296 | 4,459 | -4 | % | Organic investments (b) | 13,397 | 12,427 | +8 | % | |||||||||||||||||||
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| 2,548 | 3,557 | 1,213 | x2.1 | Free cash flow after organic investments, w/o net asset sales (a - b) | 13,035 | 12,102 | +8 | % | ||||||||||||||||||||
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| 4,211 | 6,718 | 2,708 | +55 | % | Net investments (c) | 17,449 | 15,568 | +12 | % | |||||||||||||||||||
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| 2,628 | 135 | 2,964 | -11 | % | Net cash flow (a - c) | 8,983 | 8,961 | — | ||||||||||||||||||||
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Gearing ratio*
In millions of dollars | 12/31/2019 | 09/30/2019 | 12/31/2018 | |||||||||
Current borrowings | 14,819 | 14,631 | 13,306 | |||||||||
Net current financial assets | (3,505 | ) | (3,012 | ) | (3,176 | ) | ||||||
Net financial assets classified as held for sale | 301 | — | (15 | ) | ||||||||
Non-current financial debt | 47,773 | 47,923 | 40,129 | |||||||||
Hedging instruments ofnon-current debt | (912 | ) | (767 | ) | (680 | ) | ||||||
Cash and cash equivalents | (27,352 | ) | (27,454 | ) | (27,907 | ) | ||||||
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Net debt (a) | 31,124 | 31,321 | 21,657 | |||||||||
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Shareholders’ equity - Group share | 116,778 | 114,994 | 115,640 | |||||||||
Non-controlling interests | 2,527 | 2,319 | 2,474 | |||||||||
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Shareholders’ equity (b) | 119,305 | 117,313 | 118,114 | |||||||||
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Net-debt-to-capital ratio = a / (a + b) | 20.7 | % | 21.1 | % | 15.5 | % | ||||||
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Net-debt-to-capital ratio excluding leases | 16.7 | % | 17.2 | % | 14.3 | % | ||||||
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| * | Thenet-debt-to-capital ratios on December 31, 2019 and September 30, 2019 include the impact of the new IFRS 16 rule, effective January 1, 2019. |
13
Return on average capital employed
| > | Twelve months ended December 31, 2019 |
In millions of dollars | Exploration & Production | Integrated Gas, Renewables & Power | Refining & Chemicals | Marketing & Services | Group | |||||||||||||||
Adjusted net operating income | 7,509 | 2,389 | 3,003 | 1,653 | 14,073 | |||||||||||||||
Capital employed at 12/31/2018* | 89,400 | 34,746 | 10,599 | 6,442 | 138,519 | |||||||||||||||
Capital employed at 12/31/2019* | 88,844 | 41,549 | 12,228 | 8,371 | 148,828 | |||||||||||||||
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ROACE | 8.4 | % | 6.3 | % | 26.3 | % | 22.3 | % | 9.8 | % | ||||||||||
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| > | Twelve months ended September 30, 2019 |
In millions of dollars | Exploration & Production | Integrated Gas, Renewables & Power | Refining & Chemicals | Marketing & Services | Group | |||||||||||||||
Adjusted net operating income | 7,454 | 2,271 | 3,323 | 1,512 | 14,094 | |||||||||||||||
Capital employed at 09/30/2018* | 92,104 | 36,587 | 12,884 | 6,841 | 145,298 | |||||||||||||||
Capital employed at 09/30/2019* | 88,560 | 41,516 | 11,658 | 7,570 | 147,145 | |||||||||||||||
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ROACE | 8.3 | % | 5.8 | % | 27.1 | % | 21.0 | % | 9.6 | % | ||||||||||
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| * | At replacement cost (excludingafter-tax inventory effect). |
14
This press release presents the results for 2019 from the consolidated financial statements of TOTAL S.A. as of December 31, 2019 (unaudited). The audit procedures by the Statutory Auditors are underway. The consolidated financial statements (unaudited) are available on the TOTAL websitetotal.com. This document does not constitute the Annual Financial Report (Rapport Financier annuel) within the meaning of article L. 451.1.2 of the French monetary and financial code (code monétaire et financier).
This document may contain forward-looking information on the Group (including objectives and trends), as well as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notably with respect to the financial condition, results of operations, business, strategy and plans of TOTAL.
Such forward-looking information and statements included in this document are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future, and are subject to a number of risk factors that could lead to a significant difference between actual results and those anticipated, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, changes in regulations including environmental and climate, currency fluctuations, as well as economic and political developments and changes in business conditions. Certain financial information is based on estimates particularly in the assessment of the recoverable value of assets and potential impairments of assets relating thereto.
Neither TOTAL nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Further information on factors, risks and uncertainties that could affect the Group’s business, financial condition, including its operating income and cash flow, reputation or outlook is provided in the most recent Registration Document, the French language version of which is filed by the Company with the French Autorité des Marchés Financiers and annual report on Form20-F/A filed with the United States Securities and Exchange Commission (“SEC”).
Financial information by business segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of TOTAL. In addition to IFRS measures, certain alternative performance indicators are presented, such as performance indicators excluding the adjustment items described below (adjusted operating income, adjusted net operating income, adjusted net income), return on equity (ROE), return on average capital employed (ROACE), gearing ratio and operating cash flow before working capital changes. These indicators are meant to facilitate the analysis of the financial performance of TOTAL and the comparison of income between periods. They allow investors to track the measures used internally to manage and measure the performance of the Group.
These adjustment items include:
(i) Special items
Due to their unusual nature or particular significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, transactions such as restructuring costs or asset disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to occur again within the coming years.
(ii) Inventory valuation effect
The adjusted results of the Refining & Chemicals and Marketing & Services segments are presented according to the replacement cost method. This method is used to assess the segments’ performance and facilitate the comparability of the segments’ performance with those of its competitors.
In the replacement cost method, which approximates the LIFO(Last-In,First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either themonth-end price differentials between one period and another or the average prices of the period rather than the historical value. The inventory valuation effect is the difference between the results according to the FIFO(First-In,First-Out) and the replacement cost.
(iii) Effect of changes in fair value
The effect of changes in fair value presented as an adjustment item reflects, for some transactions, differences between internal measures of performance used by TOTAL’s management and the accounting for these transactions under IFRS.
IFRS requires that trading inventories be recorded at their fair value usingperiod-end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories based on forward prices.
Furthermore, TOTAL, in its trading activities, enters into storage contracts, whose future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect.
The adjusted results (adjusted operating income, adjusted net operating income, adjusted net income) are defined as replacement cost results, adjusted for special items, excluding the effect of changes in fair value.
Euro amounts presented for the fully adjusted-diluted earnings per share represent dollar amounts converted at the average euro-dollar (€-$) exchange rate for the applicable period and are not the result of financial statements prepared in euros.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to separately disclose proved, probable and possible reserves that a company has determined in accordance with SEC rules. We may use certain terms in this press release, such as “potential reserves” or “resources”, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form20-F/A, File N°1-10888, available from us at 2, place Jean Millier – Arche Nord Coupole/Regnault - 92078Paris-La Défense Cedex, France, or at our website total.com. You can also obtain this form from the SEC by calling1-800-SEC-0330 or on the SEC’s website sec.gov.
15