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MSN Money: Oil Company Total Reports 4Q Loss

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PARIS (AP) – Hurricanes and high raw material costs drove Total SA's fourth-quarter net profit down 37 percent, the company said Wednesday, but surging oil prices still lifted it to a record euro12.27 billion (US$14.63 billion) profit for the full year.
The world's fourth-largest oil company also reported a strong increase in refining margins that helped 2005 net income rise 13 percent from euro10.9 billion a year earlier.
Total's net profit in the fourth quarter dropped to euro2.34 billion (US$2.78 billion). Analysts blamed the decline on high raw material prices at Arkema, the chemical unit slated to be spun off later this year, and on outages due to hurricanes in the Gulf of Mexico.
“In a context of continued demand growth, the tension on production capacity — aggravated by the effect of hurricanes in the Gulf of Mexico — raised oil prices and refining margins to high levels,” Chairman and Chief Executive Thierry Desmarest said in a statement.
The results broadly matched analysts' expectations. An IBES consensus of 23 analysts expected Total to post an annual net profit of euro12.34 billion (US$14.68 billion).
“The fourth quarter net income figures do not concern me,” said Frederic de Villaret of SG Securities. “The important thing is the long term.”
Total's adjusted net profit for the year, stripping out one-time amortization charges and the impact of a shift to a new inventory accounting method, rose 31 percent to euro12 billion (US$14.2 billion), the company said. For the fourth quarter, Total's adjusted net profit rose 6 percent to euro3.05 billion (US$3.63 billion).
Fourth-quarter revenues rose 19 percent to euro39.9 billion (US$47.5 billion) as full-year revenues rose 17 percent to euro143.2 billion (US$170.38 billion).
Analysts said they were impressed by Total's ability to replace reserves compared to its rivals, which at 20 billion barrels — up from 18.4 billion a year earlier — amounted to 22 years of current output.
Total, which has drawn controversy in France for benefiting from higher prices on the backs of consumers, also said it will increase its dividend by 20 percent to euro6.48 (US$7.71) per share for 2005.
Total's exploration and production division was its big growth driver, with an adjusted operating profit surging 43 percent to euro18.4 billion (US$21.89 billion) over the year thanks to rising hydrocarbon prices last year and a stronger dollar in the fourth quarter.
Oil prices jumped around 40 percent last year, topping US$70 a barrel in the summer months after Hurricane Katrina struck.
Refining operations were hard hit by the hurricanes, however, recording a decline of 11 percent in adjusted operating profit in the fourth quarter. For the full year though, operating income for the division rose 21 percent to euro3.9 billion (US$4.64 billion) behind robust margins. Refining margins have been declining in the first quarter of 2006 in Europe.
Chemical operations suffered from high raw material costs in the fourth quarter, leading to a drop of 47 percent in adjusted operating profit.
Desmarest, commenting on the figures, appeared to dispel reports in French media that one of his titles could be given to another executive.
“I have always said that I'll make sure to organize my succession,” he said. “And I'm confident that we have the skills needed in house … But this is not an issue for 2006.”
Shares of Total were flat at euro215.30 (US$256.26) in Paris trading.

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