1st Quarter Results
Total Fina Elf.
22 May 2002
TotalFinaElf reports First Quarter 2002 net income
excluding non-recurring items
• 1.42 billion euros, a 36% decrease
• 2.12 euros per share, a 32% decrease
7.1% increase in hydrocarbon production
Paris - May 22, 2002 - TotalFinaElf reported a limited decline of 32% in
earnings per share, excluding non-recurring items, for the first quarter 2002
versus the same quarter last year, despite the overall weaker oil market
environment.
The average Brent oil price fell by 18% to $21.1/b in the first quarter 2002
from $25.8/b in the first quarter 2001. European refining margins fell to one-
sixth of the year-ago level to reach $2.4/t in the first quarter 2002, and
petrochemical margins decreased to historic lows. Partially offsetting these
impacts was a 5% increase in the dollar relative to the euro, with the average
exchange rate settling to $0.88 per euro in the first quarter 2002.
Given the weaker environment, operating income from the business segments fell
by 35% to 2,432 million euros in the first quarter 2002 from 3,748 million euros
in the first quarter 2001. There were no non-recurring items affecting operating
income for either quarter.
Net operating income from the business segments excluding non-recurring items
fell by 41% to 1,356 million euros in the first quarter 2002 from 2,299 million
euros in the first quarter 2001. The proportionately larger decrease in net
operating income takes into account the fact that the Upstream segment, which is
more heavily taxed than the Downstream and Chemicals segments, contributed a
larger share of the operating income in the first quarter 2002 than in the first
quarter 2001.
Net income excluding non-recurring items declined by 36% to 1,419 million euros
in the first quarter 2002 versus the same period last year. Relative to the
decrease in net operating income from the business segments, the decrease in net
income takes into account the positive impact of lower net interest expense in
the first quarter 2002 as compared to the first quarter 2001.
Earnings per share excluding non-recurring items, based on 670.6 million fully-
diluted weighted-average shares in the first quarter 2002, declined by only 32%
to 2.12 euros per share compared to 3.12 euros per share in the same quarter
last year, reflecting the positive impact of the share buy-back program.
During the first quarter 2002, TotalFinaElf bought back 2.60 million shares for
a total of 0.41 billion euros. As of March 31, 2002, the number of fully-diluted
shares was 670.6 million compared to 704.5 million at March 31, 2001.
Net income for the first quarter 2002 declined by 35% to 1,429 million euros,
including a net positive impact from non-recurring items of 10 million euros,
consisting primarily of gains on sales of financial participations offset by
additional restructuring charges in the Chemicals segment and a provision
related to the company's decision not to reopen the AZF fertilizer plant in
Toulouse following the explosion there on September 21, 2001.
The estimation of the potential financial impact stemming from the crisis in
Argentina has not been completed at this time and no provision was made in the
first quarter 2002. TotalFinaElf's operations in Argentina are limited relative
to the scale of the Group.
The net-debt-to-equity ratio at March 31, 2002, was 29.5% compared to 30.9% at
December 31, 2001.
Consolidated accounts - TotalFinaElf
In millions of euros 1Q02 1Q01 %
Sales 23,784 27,322 -13%
Operating income from business segments 2,432 3,748 -35%
excluding non-recurring items
Net operating income from business segments 1,356 2,299 -41%
excluding non-recurring items
Net income 1,419 2,206 -36%
excluding non-recurring items
Net income 1,429 2,206 -35%
Earnings per share (euros) 2.12 3.12 -32%
excluding non-recurring items
Investments (1) 2,109 2,433 -13%
Divestments (2) 586 1,168 -50%
based on selling price
Cash flow from operating activities 2,458 4,572 -46%
(1) includes increases in long-term loans
(2) includes repayments of long-term loans
Impact of non-recurring items
in millions of euros 1Q02 1Q01
Impact of non-recurring items on operating income - -
Impact of non-recurring items on net income
Gain on asset sales 143 -
Toulouse-AZF plant impact (102) -
Restructuring charges and early retirement plans (31) -
Total 10 -
Number of shares
Millions 1Q02 1Q01 %
Fully-diluted weighted-average shares 670.6 706.2 -5%
Oil market environment
1Q02 1Q01 %
€/$ 0.88 0.92 +5%*
Brent ($/b) 21.1 25.8 -18%
European refining margins TRCV ($/t) 2.4 15.1 -84%
* change in the dollar versus the euro
Upstream
Operating income from the Upstream segment fell by 22% to 2,016 million euros in
the first quarter 2002 from 2,573 million euros in the first quarter 2001,
primarily as a result of the decline in hydrocarbon prices.
Net operating income excluding non-recurring items from the Upstream segment
fell by 25% to 1,066 million euros in the first quarter 2002.
Hydrocarbon production rose by 7.1% to 2,401 thousand barrels of oil equivalent
per day (kboe/d) in the first quarter 2002 from 2,242 kboe/d in the first
quarter 2001. Excluding the decrease in production linked to OPEC quota
reductions, Upstream production increased by 9.9%. Production growth was
primarily due to a number of start-ups, the largest being Elgin-Franklin in the
UK North Sea, Girassol in Angola, Huldra in Norway, Deir Ez Zor gas in Syria,
and the Sincor upgrader in Venezuela.
In Europe, during the first quarter 2002, production from the K1A gas field in
the Dutch North Sea started in early March, and a rearrangement of interests in
the fields within the Oseberg zone in the Norwegian North Sea allowed the
company to have a 10% interest in all of the Oseberg zone fields.
The tax changes proposed by the British government had no impact on the first
quarter 2002 results. An evaluation of the impact of the proposed changes, if
approved, is underway.
In the CIS, TotalFinaElf signed an exploration and development agreement with
the Russian company Yukos covering the Shatsky zone in the Black Sea.
In the Middle East, the South Pars offshore gas and condensate field (Phases 2
and 3) in Iran began production in March. In Syria, the Dezgaz project, intended
to commercialize the gas production from the Deir Ez Zor region, reached full
capacity. In Oman, TotalFinaElf was awarded a 100% interest in the exploration
Block 34.
In Asia, TotalFinaElf was awarded a 60% interest in Brunei's offshore
exploration Block J.
In Africa, the highlight of the first quarter 2002 has been the rapid increase
in production from the Girassol field on Block 17 offshore Angola. Launched in
December 2001, production reached its projected plateau of 200 kb/d during the
first quarter 2002. In Nigeria, the final investment decision was approved for
the 4th and 5th natural gas liquefaction trains at the Bonny LNG plant.
In South America, the Kairi-2 appraisal well, offshore Trinidad, was drilled and
successfully tested. In Venezuela, first production of synthetic crude from the
Sincor upgrader began in March 2002.
Upstream - key figures 1Q02 1Q01 %
Production (kboe/d) 2,401 2,242 +7%
• Liquids (kb/d) 1,558 1,477 +5%
• Gas (Mcfd) 4,607 4,194 +10%
Operating income (M€) 2,016 2,573 -22%
excluding non-recurring items
Net operating income (M€) 1,066 1,422 -25%
excluding non-recurring items
Investments (M€) 1,643 1,838 -11%
Divestments (M€) 223 152 +47%
based on selling price
Cash flow from operating activities (M€) 1,692 2,115 -20%
Downstream
Operating income from the Downstream segment fell by 66% to 295 million euros in
the first quarter 2002 from 856 million euros in the first quarter 2001. The
decrease is due largely to the sharp decline in European refining margins and to
a lesser extent to marketing margins. The severe downturn in the market
environment had a strong negative impact on results which was partially offset
by continued synergy and productivity gains.
The 64% decrease in net operating income excluding non-recurring items for the
first quarter 2002 versus the same period last year reflects the decline in
operating income.
Taking into account the poor market conditions in the first quarter 2002 and the
program of refinery turn-arounds, refinery throughput declined by 4% to 2.39
Mb/d in the first quarter 2002 from 2.50 Mb/d in the first quarter 2001.
Downstream - key figures 1Q02 1Q01 %
Refinery throughput* (kb/d) 2,393 2,497 -4%
Operating income (M€) 295 856 -66%
excluding non-recurring items
Net operating income (M€) 250 697 -64%
excluding non-recurring items
Investments (M€) 132 129 +2%
Divestments (M€) 35 922 -96%
based on selling price
Cash flow from operating activities (M€) 581 1,008 -42%
* includes share of Cepsa
Chemicals
Sales for the Chemicals segment decreased by 10% to 4,748 million euros in the
first quarter 2002 from 5,283 million euros in the first quarter 2001.
Operating income fell by 62% to 121 million euros in the first quarter 2002 from
319 million euros in the first quarter 2001. The decrease was driven primarily
by the sharp fall in base chemical margins to historic lows. Intermediates &
performance polymers as well as the Specialties resisted relatively well in a
difficult environment.
Net operating income excluding non-recurring items declined to 40 million euros
in the first quarter 2002, a 78% decrease from the same quarter last year.
Chemicals - key figures (M€) 1Q02 1Q01 %
Sales 4,748 5,283 -10%
Operating income 121 319 -62%
excluding non-recurring items
Net operating income 40 180 -78%
excluding non-recurring items
Investments 256 400 -36%
Divestments
based on selling price 32 78 -59%
Cash flow from operating activities (10) 367 -
Summary and outlook
Investments reflected the announced strategy of the company, with 78% of first
quarter investments dedicated to the Upstream segment.
Divestments in the first quarter 2002, based on selling price, were 586 million
euros, being comprised notably of sales of financial participations and shares
of Sanofi-Synthelabo.
TotalFinaElf bought back 2.78 million of its own shares for 0.44 billion euros
over the first four months of 2002.
Realization of growth and synergies/productivity programs progressed
satisfactorily and in line with announced objectives. Good performance by the
Upstream segment allows confirmation of the full-year objective to increase
hydrocarbon production by 10% in 2002 versus 2001.
Since the beginning of the second quarter 2002, the oil market environment has
remained mixed. Refining and petrochemical margins are still at very low levels,
while oil prices have increased.
To listen to a replay (available 2 days) of today's conference call held at
5:00 p.m (Paris time) by Robert Castaigne, CFO of TotalFinaElf, please dial
+ 44 (0) 208 288 44 59 (access code 616 162) from Europe or + 1 703 736 7336
(access code 616 162) from the US.
The first quarter 2001 financial results released on May 17, 2001, are based on
internal reporting The interim financial statements included in this document
for the first quarter 2001 and 2002 are unaudited. This document may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the financial condition, results
of operations, business, strategy and plans of the TotalFinaElf Group. Such
statements are based on a number of assumptions that could ultimately prove
inaccurate, and are subject to a number of risk factors, including currency
fluctuations, the price of petroleum products, the ability to realize cost
reductions and operating efficiencies without unduly disrupting business
operations, environmental regulatory considerations and general economic and
business conditions. The financial information contained in this document has
been prepared in accordance with French GAAP, and certain elements would differ
materially upon reconciliation to US GAAP. The TotalFinaElf Group does not
assume any obligation to update publicly any forward-looking statement, whether
as a result of new information, future events or otherwise. Further information
on factors which could affect the company's financial results is provided in
documents filed by the Group and its affiliates with the French Commission des
Operations de Bourse and the US Securities and Exchange Commission.
OPERATING INFORMATION BY SEGMENT
FIRST QUARTER 2002
Upstream
Combined liquids and gas production by region
in kboe/d
1Q02 1Q01 %
Europe 888 777 +14%
Africa 682 634 +6%
North America 42 47 - 11%
Far East 229 226 +1%
Middle East 411 413 -
South America 143 138 +4%
Rest of world 6 7 -14%
Total production 2,401 2,242 +7%
Liquids production by region
in kboe/d
1Q02 1Q01 %
Europe 455 407 +12%
Africa 606 564 +7%
North America 5 7 -29%
Far East 25 27 -7%
Middle East 366 372 -2%
South America 95 93 +2%
Rest of world 6 7 -14%
Total production 1,558 1,477 +5%
Gas production by region
in Mcfd
1Q02 1Q01 %
Europe 2,365 2,000 +18%
Africa 399 368 +8%
North America 194 218 -11%
Far East 1,159 1,139 +2%
Middle East 227 224 +1%
South America 263 245 +7%
Rest of world - - -
Total production 4,607 4,194 +10%
Downstream
Refinery throughput by region
in kb/d
1Q02 1Q01 %
France 904 1,041 -13%
Rest of Europe 1,198 1,166 +3%
Rest of world 291 290 -
Total refinery throughput* 2,393 2,497 -4%
* includes share of Cepsa
Chemicals
As of January 1, 2002, results of the Chlorochemicals activities have been moved
from the Intermediates & Performance Polymers sector to the Petrochemicals &
Plastics sector, which already includes the chlorovinyl chain. To reflect the
broadening of this sector's activity, the name has been changed to 'Base
chemicals & polymers'. The data presented in the table below has been restated
for the year 2001 to take into account this change.
Chemicals - key figures (B€) 1Q02 1Q01 %
Chemicals Sales 4.75 5.28 -10%
• Base chemicals & polymers 1.79 2.16 -17%
• Intermediates & performance polymers 0.97 1.16 -16%
• Specialties 1.97 1.96 +1%
• Corporate -Chemicals 0.02 0 -
Chemicals Operating income 0.12 0.32 -62%
• Base chemicals & polymers (0.07) 0.09 -
• Intermediates & performance polymers 0.09 0.11 -18%
• Specialties 0.13 0.13 -
• Corporate - Chemicals (0.03) (0.01) -
The 2001 data for the Chemicals, reflecting the new sector allocation for the
Chlorochemicals, is presented by quarter in the table below.
in billions of euros 1Q01 2Q01 3Q01 4Q01 2001
Chemical Sales 5.28 5.21 4.86 4.21 19.56
• Base chemicals & polymers 2.16 1.97 1.90 1.54 7.57
• Intermediates & performance polymers 1.16 1.10 1.00 0.91 4.17
• Specialties 1.96 2.12 1.94 1.75 7.77
• Corporate - Chemicals 0 0.02 0.02 0.01 0.05
Chemicals Operating income 0.32 0.29 0.22 0.26 1.09
• Base chemicals & polymers 0.09 0.03 0.06 0.07 0.25
• Intermediates & performance polymers 0.11 0.12 0.06 0.04 0.33
• Specialties 0.13 0.16 0.12 0.09 0.50
• Corporate - Chemicals (0.01) (0.02) (0.02) 0.06 0.01
This information is provided by RNS
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