3rd Quarter Results
Total S.A.
10 November 2004
TOTAL
News Release
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Catherine ENCK
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Patricia MARIE
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Paul FLOREN
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Christine de CHAMPEAUX
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Bertille ARON
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Mary DWYER
Tel. 33(1) 47 44 21 19
Isabelle CABROL
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Charles-Edouard ANFRAY
Tel. 33(1) 47 44 65 55
Franklin BOITIER
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Philippe GATEAU
Tel. 33(1) 47 44 47 05
TOTAL S.A.
Capital 6 525 530 660 euros
542 051 180 R.C.S. Nanterre
www.total.com
Paris, November 10, 2004
Net income adjusted for special items sharply higher in third quarter 2004
compared to third quarter 2003:
• +39% to 2.38 billion for results in euros
• +43% to 3.87 for earnings per share in euros
• +51% to 2.91 billion for results expressed in dollars*
• +55% to 4.73 for earnings per share expressed in dollars*
Interim dividend of 2.40 euros per share payable November 24, 2004
Results expressed in dollars*
3rd quarter 2004 9 months 2004
2.91 B$ +51% Net income 7.99 B$ +28%
4.73 $/share +55% adjusted for special items 12.92 $/share +32%
2.89 B$ +50% Net income 7.81 B$ +29%
Results expressed in euros
3rd quarter 2004 9 months 2004
2.38 B€ +39% Net income 6.52 B€ +16%
3.87 €/share +43% adjusted for special items 10.54 €/share +20%
2.37 B€ +38% Net income 6.38 B€ +17%
* dollar amounts represent euro amounts converted at the average €/$ exchange
rate for the period
Paris, November 10, 2004 - The Board of Directors of Total, chaired by CEO
Thierry Desmarest met on November 9, 2004 to review the consolidated accounts
for the third quarter 2004.
Net income adjusted for special items rose to 2,380 million euros (M€) in the
third quarter 2004, an increase of 39% compared to the third quarter 2003.
Expressed in dollars, the increase was 51%.
Commenting on the results, Thierry Desmarest said:
'In the third quarter 2004, growing concern over the tight supply-demand
situation drove oil prices to new highs. European refining margins increased
sharply compared to the third quarter last year, mainly because of strong fuel
demand in the Atlantic Basin. In addition, the market conditions for
petrochemicals improved despite the high price of raw materials.
The strong increase in Total's results reflects primarily an improvement in the
market environment affecting the company. The benefit of the underlying 4%
production growth for the quarter was largely offset by the scheduled summer
shut-down program in the North Sea. The Downstream and Chemicals segments
continued to grow their activities and implement self-help programs.
Our strong earnings and profitability performance, which continues to be among
the best in the industry, demonstrates the capacity of Total to fully benefit
from this environment of high oil prices and from the strong production growth
over the past five years.
Over the first nine months of 2004, Total invested 6.7 billion dollars, an
increase in investment in line with its target for the year.'
Total - consolidated accounts
3Q04 3Q03 % in millions of euros 9M04 9M03 %
31,111 24,469 +27% Sales 87,868 77,119 +14%
4,473 2,939 +52% Operating income from business 12,046 9,795 +23%
segments adjusted for special items
3,406 2,502 +36% Upstream 9,360 7,824 +20%
752 335 +124% Downstream 2,025 1,570 +29%
315 102 +209% Chemicals 661 401 +65%
2,245 1,570 +43% Net operating income from business 6,288 5,340 +18%
segments adjusted for special items
2,380 1,710 +39% Net income 6,520 5,597 +16%
adjusted for special items
2,368 1,710 +38% Net income 6,375 5,435 +17%
3.87 2.71 +43% Earnings per share (euros) 10.54 8.77 +20%
adjusted for special items
1,927 1,916 +1% Investments 5,476 4,918 +11%
185 150 +23% Divestments 538 1,300 -59%
at selling price
4,035 3,249 +24% Cash flow from operating activities* 10,741 10,205 +5%
* includes disbursements related to the Toulouse-AZF reserve of 65 M€ in the
third quarter 2004, 302 M€ in the third quarter 2003, 287 M€ for the first nine
months of 2004 and 634 M€ for the first nine months of 2003
Special items
3Q04 3Q03 in millions of euros 9M04 9M03
Impact of special items on operating income
- - - -
Impact of special items on net income
- - Gains on asset sales - 30
- - Additional Toulouse-AZF reserve (98) -
Restructuring charges and
(12) - early retirement plans (43) (34)
- - Impairments - -
- - Other (4) (158)*
(12) - Total (145) (162)
* includes (155) M€ provision for Chemicals
Number of shares
3Q04 3Q03 % millions 9M04 9M03 %
614.2 630.5 -3% Fully-diluted weighted-average shares 618.5 638.0 -3%
Market environment
3Q04 3Q03 % 9M04 9M03 %
1.22 1.12 -8%* €/$ 1.23 1.11 -10%*
41.5 28.4 +46% Brent ($/b) 36.4 28.6 +27%
32.9 14.6 +125% European refining margins TRCV ($/t) 29.6 21.5 +38%
* change in the dollar versus the euro
Third quarter 2004 results
Compared to the third quarter 2003, the third quarter 2004 oil market
environment was marked by a sharp increase in the price of crude oil (+46% for
Brent) and European refining margins (+125% for TRCV). Market conditions for
petrochemicals improved despite the high price of raw materials.
The 8% decrease in the value of the dollar relative to the euro partially offset
the positive impact of the improved market environment on the results of the
business segments.
In this more favorable context, operating income from the business segments
adjusted for special items increased by 52% to 4,473 M€ compared to 2,939 M€ in
the third quarter 2003. There were no special items affecting operating income
from the business segments for the two periods.
Net operating income from the business segments adjusted for special items rose
to 2,245 M€, a 43% increase from 1,570 M€ in the third quarter 2003. Compared to
the increase in operating income, this lesser increase is due to a higher
effective tax rate in the third quarter 2004 compared to the third quarter 2003.
Net income adjusted for special items was 2,380 M€, a 39% increase from 1,710 M€
in the third quarter 2003. Special items affecting net income in the third
quarter 2004 were related to restructuring charges in the Chemicals for 12 M€.
There were no special items in the third quarter 2003.
During the third quarter 2004, the Group bought back 4.1 million of its shares
for 0.7 billion euros. At September 30, 2004 there were 613.3 million fully-
diluted shares compared to 627.9 million a year ago and 616.9 million at June
30, 2004.
Earnings per share adjusted for special items, based on 614.2 million fully-
diluted weighted-average shares, rose to 3.87 euros in the third quarter 2004
from 2.71 euros in the third quarter 2003, an increase of 43%, which is a higher
percentage increase than for net income thanks to the accretive impact of share
buybacks over the past twelve months.
Reported net income rose to 2,368 M€ from 1,710 M€ in the third quarter 2003.
The net-debt-to-equity ratio was 22.2% at September 30, 2004 compared to 28.5%
at June 30, 2004 and 25.6% at September 30, 2003.
Cash flow from operating activities rose to 4,035 M€, an increase of 24%
compared to the third quarter 2003. Excluding disbursements related to the
Toulouse-AZF reserve of 65 M€ in the third quarter 2004 and 302 M€ in the third
quarter 2003, cash flow from operating activities increased by 15%.
Investments were 1,927 M€, or approximately 2.4 B$. Divestments in the third
quarter 2004, based on selling price, were 185 M€.
Net cash flow(1) was 2,293 M€ compared to 1,483 M€ for the same period last
year.
(1)net cash flow=cash flow from operating activities + divestments - investments
Upstream
3Q04 3Q03 % Upstream - key figures 9M04 9M03 %
2,479 2,542 -2% Hydrocarbon production (kboe/d) 2,571 2,522 +2%
1,674 1,654 +1% • Liquids (kb/d) 1,698 1,649 +3%
4,386 4,831 -9% • Gas (Mcf/d) 4,749 4,759 -
3,406 2,502 +36% Operating income (M€) 9,360 7,824 +20%
adjusted for special items
1,527 1,241 +23% Net operating income (2)(M€) 4,412 3,864 +14%
adjusted for special items
1,381 1,258 +10% Investments (M€) 3,924 3,554 +10%
114 85 +34% Divestments (M€) 315 309 +2%
at selling price
2,265 2,569 -12% Cash flow from operating activities (M€) 7,239 7,024 +3%
(2) 3Q04 and the first nine months 2004 include the equity share of Cepsa's
'Exploration & Production' results; 3Q03 and the first nine months 2003 included
the entire equity share of Cepsa's results in Downstream net operating income
Operating income from the Upstream segment adjusted for special items increased
by 36% to 3,406 M€ in the third quarter 2004 from 2,502 M€ in the third quarter
2003. This strong performance reflects the positive impact of higher hydrocarbon
prices, more so for oil than for gas, which was partially offset by further
weakness in the dollar relative to the euro.
Net operating income from the Upstream segment adjusted for special items
increased by 23% to 1,527 M€. This more moderate increase, relative to the
increase in operating income, is due to an increase in the average tax rate
compared to the third quarter 2003. The higher rate stems primarily from an
increase in the share of production coming from concessions in Nigeria and a
decrease in the share of production from the UK North Sea related to larger
shut-downs in the third quarter 2004.
The decrease in Upstream cash flow from operating activities was due mainly to
changes in working capital in the third quarter 2004.
Hydrocarbon production was 2,479 thousand barrels of oil equivalent per day
(kboe/d), a decrease of 2.5% compared to 2,542 kboe/d in the third quarter 2003.
Production was affected by scheduled North Sea shut-downs, which had a larger
impact in 2004 than in 2003, and, to a lesser extent, hurricane damage in the
Gulf of Mexico.
Reported production also includes the negative impact on entitlement volumes of
higher hydrocarbon prices on production sharing contracts.
Excluding these two elements, underlying production growth was about 4%, thanks
to increases at Amenam in Nigeria and Matterhorn in the Gulf of Mexico as well
as higher production in Libya, Algeria, Bolivia, Venezuela and Qatar.
Liquids production increased by 1% to 1,674 thousand barrels per day (kb/d) in
the third quarter 2004 from 1,654 kb/d in the same quarter last year.
Gas production decreased by 9% to 4,386 million cubic feet per day (Mcf/d) in
the third quarter 2004 from 4,831 Mcf/d in the third quarter 2003, essentially
as a result of scheduled shut-downs in the North Sea.
Several exploration successes were announced in the third quarter 2004,
including a discovery on the Kairan structure (Total 20.4%(3)) in the Caspian
Sea offshore Kazakhstan, the Laggan gas field (Total-operated 50%) in the UK
North Sea, the Mer Tres Profonde Sud permit (Total-operated 40%) in the Republic
of Congo, a discovery west of the Usan field (Total-operated 20%) offshore
Nigeria, and the discovery of gas on the Ipati block (Total-operated 80%) in
Bolivia.
In addition, Total acquired a 39.9% interest in a North Bali deep-offshore
exploration block in Indonesia as well as three new permits near the Laggan
discovery in the UK North Sea.
The third development phase of the Al Khalij oil field in Qatar started
production (Total-operated, 100%).
In Angola, development of the Rosa field on Block 17 (Total-operated, 40%) was
launched. Production start-up is expected in the first half of 2007, which will
increase and extend the production plateau of the Girassol FPSO.
Efforts to expand Total's LNG business progressed with the decision by the
shareholders of Nigeria LNG (Total, 15%) to build the sixth train, with
liquefaction capacity of 4.1 million tons per year (Mt/y), at the Bonny plant.
During the third quarter, Total announced an agreement to acquire 25% plus one
share of Novatek, the second-largest gas producer in Russia. This acquisition
will allow Total to move forward with its strategy to participate in the
development of the Russian resource base.
In mid-stream gas activities, Total and Gaz de France announced on October 18
the finalization of agreements to unwind their cross-shareholding in Gaz du
Sud-Ouest (GSO) and Compagnie France du Methane (CFM) and to give access to
Total to 2.25 billion cubic meters per year (Bm3/y), or nearly 220 Mcf/d, of net
regasification capacity in the Fos Cavaou terminal which is currently under
construction in the south of France.
On November 9, Total announced that it has reserved regasification capacity of
10 Bm3/y (approximately 1 Bcf/d) over a period of 20 years starting in 2009 at
the Sabine Pass LNG regasification terminal project on the Louisiana Gulf Coast.
(3) pending final approval
Downstream
3Q04 3Q03 % Downstream - key figures 9M04 9M03 %
2,516 2,503 +1% Refinery throughput* (kb/d) 2,501 2,441 +2%
752 335 +124% Operating income (M€) 2,025 1,570 +29%
adjusted for special items
521 287 +82% Net operating income(4) (M€) 1,468 1,278 +15%
adjusted for special items
351 212 +66% Investments (M€) 893 531 +68%
45 63 -29% Divestments (M€) 127 120 +6%
at selling price
828 269 +208% Cash flow from operating activities (M€) 2,952 3,312 -11%
* includes share of Cepsa
(4) 3Q04 and the first nine months 2004 include the equity share of Cepsa's
'Refining & Marketing' results; 3Q03 and the first nine months 2003 included
the entire equity share of Cepsa's results in Downstream net operating income
Operating income from the Downstream segment adjusted for special items
increased by 124% to 752 M€ in the third quarter 2004 from 335 M€ in the third
quarter 2003.
The increase was due primarily to the improvement in the Downstream environment.
Continued tightness in the market for fuel products in the Atlantic Basin drove
refining margins sharply higher throughout the region. Further weakness in the
dollar against the euro and lower European marketing margins due to the strong
and rapid increase in the price of refined products slightly offset the benefit
of better refining margins.
Ongoing self-help programs continued to have a positive impact on Downstream
results.
Refinery throughput increased to 2,516 kb/d, an increase of 1% compared to the
third quarter 2003. The utilization rate was 93% in the third quarter 2004.
Turnarounds on five refineries, most of these being partial turnarounds, were
launched in September and continued into the fourth quarter.
Net operating income from the Downstream segment adjusted for special items
increased to 521 M€ in the third quarter 2004 from 287 M€ in the same quarter
last year. The 82% increase is lower than the increase in operating income
primarily because of the change in the method of allocating Cepsa's results to
all the business segments, instead of entirely to the Downstream segment, which
began in the fourth quarter 2003. If the reallocation had taken place in the
third quarter 2003, the increase would have been 114%.
In October, Total announced a joint-venture with Sinochem for the creation of a
200-station network in northern China where the two companies are already
partners in the Dalian refinery.
As part of its strategy for targeted development in the Caribbean, Total
acquired a network of service stations in Puerto Rico that represents about 6%
market share.
Chemicals
3Q04 3Q03 % Chemicals key figures (M€) 9M04 9M03 %
5,228 4,182 +25% Sales 14,797 12,925 +14%
315 102 +209% Operating income 661 401 +65%
adjusted for special items
197 42 +369% Net operating income(5) 408 198 +106%
adjusted for special items
200 453 -56% Investments 613 788 -22%
19 10 +90% Divestments 68 797 -91%
at selling price
289 281 +3% Cash flow from operating activities* 229 96 +139%
(5) 3Q04 and the first nine months 2004 include the equity share of Cepsa's
'Derivative chemicals' results; 3Q03 and the first nine months 2003 included
the entire equity share of Cepsa's results in Downstream net operating income
* includes disbursements related to the Toulouse-AZF reserve of 65 M€ in the
third quarter 2004, 302 M€ in the third quarter 2003, 287 M€ for the first nine
months of 2004 and 634 M€ for the first nine months of 2003
Chemicals segment sales were 5,228 M€ compared to 4,182 M€ in the third quarter
2003, an increase of 25%.
Operating income adjusted for special items increased sharply to 315 M€ from
102 M€ in the third quarter 2003.
This performance is due primarily to an improvement in the environment for
petrochemicals and to the positive impacts of increased sales volume and
productivity programs implemented throughout the segment.
Base chemicals benefited from a rebound in petrochemical margins compared to the
third quarter 2003, notably in Europe, and despite the high level of naphtha
prices around the world. Improved product demand and a reduction in downtime led
to higher utilization rates of the steamcrackers.
Intermediate activities began to show improvement despite higher raw material
costs and the weaker dollar.
Specialties delivered solid results thanks to the benefits of growth and
self-help programs.
Net operating income adjusted for special items rose to 197 M€ from 42 M€ in the
same period last year.
Arkema, the new entity comprised of vinyl products, industrial chemicals, and
performance products, was launched on October 1. Already Arkema has a dedicated
management team and is expected to become an independent entity in 2006(6).
(6) depending on market conditions and the information/consultation process with
labor representatives
Nine months 2004 results
For the first nine months of 2004, Total benefited from an overall more
favorable environment as compared to last year.
Hydrocarbon prices increased, more for oil (+27% for Brent to 36.4 $/b) than for
gas.
European refining margins increased sharply (+38% for TRCV to 29.6 $/t). By
contrast, the dollar declined relative to the euro by 10% to 1.23 $/€ on average
compared to 1.11 $/€ on average for the first nine months of 2003.
The environment for the Chemicals improved progressively over the first nine
months of 2004. In the third quarter, demand improved to a level that
effectively offset the impact of high raw material prices and weakness in the
dollar.
In this context, operating income from the business segments adjusted for
special items increased by 23% to 12,046 M€ compared to the 9,795 M€ for the
first nine months in 2003. There were no special items affecting operating
income in either period.
Net operating income from the business segments adjusted for special items
increased by 18% to 6,288 M€ in the first nine months of 2004 from 5,340 M€ in
the first nine months of 2003.
Net income adjusted for special items was 6,520 M€, an increase of 16% compared
to the same period last year.
The impact of special items on net income was -145 M€ for the first nine months
of 2004 and -162 M€ for the first nine months of 2003.
During the first nine months of 2004, the Group bought back 16.5 million of its
shares, or about 2.5% of its capital, for 2.6 B€. In October, Total continued
buying back shares, adding another 1.7 million shares for 0.28 B€.
For the first nine months of 2004, earnings per share adjusted for special items
and based on 618.5 million fully-diluted weighted-average shares, rose to 10.54
euros from 8.77 euros in the same period last year, an increase of 20%, which
reflects the accretive impact of the share repurchases by the Group.
Net income was 6,375 M€ compared to 5,435 M€ in the first nine months of 2003.
Key operational data for the first nine months of 2004 include:
- hydrocarbon production increased by 2% to 2,571 kboe/d from 2,522 kboe/d;
excluding the price effect and the impact of the larger shut-downs in the
North Sea, the underlying growth rate for production was 5%,
- refinery throughput increased by 2% to 2,501 kb/d from 2,441 kb/d,
- Chemicals segment sales increased by 14% to 14,797 M€ from 12,925 M€.
Investments were 5,476 M€ (72% allocated for Upstream), or about 6.7 B$.
Divestments for the first nine months of 2004, based on selling price, were
538 M€ and included sales of non-strategic Upstream assets.
Net cash flow was 5,803 M€ in the first nine months of 2004.
Cancellation of outstanding shares
The Board of Directors, meeting on November 9, 2004, approved the cancellation
of 19,873,932 shares effective November 20, 2004. On that date the share capital
will be adjusted as well to 6,326,791,340 euros represented by 632,679,134
shares with a nominal value of 10 euros. This cancellation restores the Group's
capacity for share buybacks.
Interim dividend
Net income for TOTAL S.A., the parent company, was 2,145 M€ for the first nine
months of 2004 compared to 1,940 M€ for the same period last year. The Board of
Directors met on November 9, 2004 and, after closing the accounts, approved an
interim 2004 dividend in the amount of 2.40 euros payable on November 24, 2004,
to which will be added the avoir fiscal (French tax credit) pursuant to the
terms in force.
Summary and outlook
The return on average capital employed for the Group (ROACE) for the period
October 1, 2003 to September 30, 2004 was 22%. Return on equity (ROE) was 28%
for the same period.
The annualized third quarter 2004 ROACE was 25%.
Total is pursuing its investment program in line with its 2004 budget of $10
billion, giving priority to the development of Upstream activities.
Since the beginning of the fourth quarter, the oil market environment has
remained very tight. Oil prices and refining margins have stayed at high levels.
* * *
The September 30, 2004 notes to the consolidated accounts are available on the
Total web site (www.total.com). The interim accounts have been the subject of a
limited review by the company's auditors. 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 Total. 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 end 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. Total 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 Autorite des Marches Financiers and the US
Securities and Exchange Commission.
The business segment information is presented in accordance with the Group
internal reporting system used by the Chief operating decision maker to measure
performance and allocate resources internally. Due to their particular nature or
significance, certain transactions qualified as 'special items' are monitored at
the Group level and excluded from the business segment figures. In general,
special items relate to transactions that are significant, infrequent or
unusual. However, in certain instances, certain transactions such as
restructuring costs or assets disposals, which are not considered to be
representative of normal course of business, may be qualified as special items
although they may have occurred within prior years or are likely to recur within
following years. Performance measures excluding special items such as operating
income, net operating income and net income adjusted for special items, are
meant to facilitate the analysis of the financial performance and the comparison
of income between periods.
To listen to the conference call with CFO Robert Castaigne and financial
analysts today at 15:30 (Paris time), please call +44 (0)20 7162 0025 (access
code: Total) from Europe or +1 334 323 6201 (access code: Total) from the US.
For a replay, please dial (00) 44 (0) 208 288 4459 (access code 710312) from
Europe or 1 334 323 6222 (access code: 710312) from the US.
OPERATING INFORMATION BY SEGMENT
FOR THE THIRD QUARTER
AND NINE MONTHS 2004
Upstream
Combined liquids and gas production by region
3Q04 3Q03 % in kboe/d 9M04 9M03 %
701 836 -16% Europe 824 876 -6%
821 724 +13% Africa 804 707 +14%
65 60 +8% North America 69 60 +15%
243 252 -4% Far East 240 232 +3%
408 437 -7% Middle East 403 450 -10%
231 224 +3% South America 222 190 +17%
10 9 +11% Rest of World 9 7 ns
2,479 2,542 -2% Total 2,571 2,522 +2%
Liquids production by region
3Q04 3Q03 % in kb/d 9M04 9M03 %
368 441 -17% Europe 418 461 -9%
752 639 +18% Africa 732 628 +17%
19 3 ns North America 20 4 ns
30 26 +15% Far East 31 25 +24%
356 387 -8% Middle East 350 397 -12%
139 149 -7% South America 138 127 +9%
10 9 +11% Rest of World 9 7 ns
1,674 1,654 +1% Total 1,698 1,649 +3%
Gas production by region
3Q04 3Q03 % in Mcf/d 9M04 9M03 %
1,801 2,139 -16% Europe 2,201 2,256 -2%
367 447 -18% Africa 378 415 -9%
245 307 -20% North America 261 304 -14%
1,196 1,260 -5% Far East 1,167 1,163 -
279 270 +3% Middle East 283 277 +2%
498 408 +22% South America 459 344 +33%
- - - Rest of World - - -
4,386 4,831 -9% Total 4,749 4,759 -
Downstream
Refinery throughput by region
3Q04 3Q03 % in kb/d 9M04 9M03 %
996 1,015 -2% France 1,010 934 +8%
1,191 1,174 +1% Rest of Europe 1,184 1,201 -1%
329 314 +5% Rest of World 307 306 -
2,516 2,503 +1% Total* 2,501 2,441 +2%
* includes share of Cepsa
Chemicals
3Q04 3Q03 % Chemicals (B€) 9M04 9M03 %
5.23 4.18 +25% Sales 14.80 12.93 +14%
2.82 1.91 +48% • Base chemicals and polymers 7.45 5.81 +28%
0.92 0.88 +5% • Intermediates 2.81 2.77 +1%
1.49 1.39 +7% • Specialties 4.52 4.34 +4%
- - ns • Chemicals - Corporate 0.02 0.01 ns
0.32 0.10 x3 Operating Income* 0.66 0.40 +65%
0.18 0.02 x9 • Base chemicals and polymers 0.22 0.05 ns
0.03 0.01 x3 • Intermediates 0.10 0.11 -9%
0.12 0.10 +20% • Specialties 0.38 0.31 +23%
(0.01) (0.03) ns • Chemicals - Corporate (0.04) (0.07) ns
* adjusted for special items
Total financial statements
Third quarter and first nine months 2004 consolidated accounts, French GAAP
CONSOLIDATED STATEMENTS OF INCOME
Total
Third quarter Third quarter Amounts in millions of euros (1) 9 months 9 months
2004 2003 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
31,111 24,469 Total Sales 87,868 77,119
(25,390) (20,307) Operating expenses (72,258) (63,815)
(1,280) (1,264) Depreciation, depletion, and amortization (3,704) (3,672)
of tangible assets
Operating income
(32) (41) Corporate (140) (163)
4,473 2,939 Business segments* 12,046 9,795
4,441 2,898 Total operating income 11,906 9,632
(33) (27) Interest expense, net (116) (111)
41 20 Dividend income on non-consolidated subsidiaries 135 96
- (1) Dividends on subsidiaries' redeemable preferred shares (3) (4)
(151) (134) Other income (expense), net (404) (628)
(2,258) (1,317) Provision for income taxes (5,889) (4,168)
423 342 Equity in income (loss) of affiliates 1,012 868
2,463 1,781 Income before amortization of acquisition goodwill 6,641 5,685
(26) (32) Amortization of acquisition goodwill (83) (98)
2,437 1,749 Consolidated net income 6,558 5,587
69 39 of which minority interest 183 152
2,368 1,710 NET INCOME** 6,375 5,435
3.86 2.71 Earnings per share (euros)*** 10.31 8.52
4,473 2,939 * Operating income from business segments, adjusted 12,046 9,795
for special items
2,245 1,570 Net operating income from business segments, adjusted 6,288 5,340
for special items
2,380 1,710 ** Net income (Group share), adjusted for special items 6,520 5,597
3,87 2.71 *** Earnings per share, adjusted for special items (euro) 10.54 8.77
(1) Except for earnings per share
CONSOLIDATED BALANCE SHEETS
Total
Amounts in millions of euros
30/09/2004 30/06/2004 31/12/2003 30/09/2003
(unaudited) (unaudited) (unaudited)
ASSETS
NON-CURRENT ASSETS:
Intangible assets, net 2,056 2,089 2,017 2,089
Property, plant, and equipment, net 37,398 37,547 36,286 37,146
Equity affiliates: investments and loans 8,420 8,215 7,883 8,078
Other investments 1,207 1,196 1,162 1,228
Other non-current assets 3,059 3,317 3,152 3,527
Total non-current assets 52,140 52,364 50,450 52,068
CURRENT ASSETS:
Inventories, net 7,044 6,263 6,137 6,163
Accounts receivable, net 14,646 14,214 12,357 12,111
Prepaid expenses and other current assets 4,660 4,710 4,779 5,057
Short-term investments 1,356 1,369 1,404 1,413
Cash and cash equivalents 12,523 11,310 4,836 9,676
Total current assets 40,229 37,866 29,513 34,420
TOTAL ASSETS 92,369 90,230 79,963 86,488
LIABILITIES & SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Common shares 6,543 6,538 6,491 6,788
Paid-in surplus and retained earnings 34,307 31,917 30,408 32,352
Cumulative translation adjustment (2,997) (2,626) (3,268) (2,197)
Treasury shares (5,788) (5,133) (3,225) (6,662)
Total shareholders' equity 32,065 30,696 30,406 30,281
SUBSIDIARIES' REDEEMABLE PREFERRED SHARES 403 411 396 429
MINORITY INTEREST 674 625 664 637
LONG-TERM LIABILITIES:
Deferred income taxes 5,591 5,665 5,443 5,628
Employee benefits 3,833 3,870 3,818 4,009
Other liabilities 6,225 6,426 6,344 6,623
Total long-term liabilities 15,649 15,961 15,605 16,260
LONG-TERM DEBT 10,666 10,759 9,783 9,849
CURRENT LIABILITIES:
Accounts payable 12,052 11,214 10,304 9,496
Other creditors and accrued liabilities 10,753 10,012 8,970 10,771
Short-term borrowings and bank overdrafts 10,107 10,552 3,835 8,765
Total current liabilities 32,912 31,778 23,109 29,032
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 92,369 90,230 79,963 86,488
CONSOLIDATED STATEMENTS OF CASH FLOWS
Total
Third quarter Third quarter 9 months 9 months
2004 2003 Amounts in millions of euros 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
CASH FLOW FROM OPERATING ACTIVITIES
2,437 1,749 Consolidated net income 6,558 5,587
1,378 1,340 Depreciation, depletion, and amortization 3,975 3,904
(49) (243) Long-term liabilities, valuation allowances, and (13) (409)
deferred taxes
81 90 Unsuccessful exploration costs 263 251
4 (28) (Gains)/Losses on sales of assets (142) 127
(332) (298) Equity in income of affiliates (in excess of)/less (491) (489)
than dividends received
121 6 Other changes, net 142 9
3,640 2,616 Cash flow from operating activities before changes 10,292 8,980
in working capital
395 633 (Increase)/Decrease in operating assets and liabilities 449 1,225
4,035 3,249 CASH FLOW FROM OPERATING ACTIVITIES (1) 10,741 10,205
CASH FLOW USED IN INVESTING ACTIVITIES
(1,648) (1,384) Intangible assets and property, plant, and (4,497) (3,915)
equipment additions
(80) (92) Exploration expenditures charged to expenses (238) (234)
(28) (345) Acquisitions of subsidiaries, net of cash acquired (37) (337)
(19) (42) Investments in equity affiliates and other securities (108) (80)
(152) (53) Increase in long-term loans (596) (352)
(1,927) (1,916) Total expenditures (5,476) (4,918)
28 22 Proceeds from sale of intangible assets and 171 148
property, plant, and equipment
- (1) Proceeds from sale of subsidiaries, net of cash sold 1 734
8 21 Proceeds from sale of non-current investments 49 89
149 108 Repayment of long-term loans 317 329
185 150 Total divestitures 538 1,300
13 263 (Increase)/Decrease in short-term investments 49 108
(1,729) (1,503) CASH FLOW USED IN INVESTING ACTIVITIES (4,889) (3,510)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance and repayment of shares:
- 24 Parent company's shareholders 371 69
(655) (966) Purchase of treasury shares (2,563) (3,516)
36 14 Minority shareholders 118 37
- - Subsidiaries' redeemable preferred shares - -
Cash dividends paid:
- - - Parent company's shareholders (2,853) (2,571)
(4) (6) - Minority shareholders (145) (114)
460 (131) Net issuance/(repayment) of long-term debt 1,700 1,278
(680) 437 Increase/(Decrease) in short-term borrowings and 5,189 3,070
bank overdrafts
1 (1) Other changes, net (2) (4)
(842) (1,503) CASH FLOW FROM FINANCING ACTIVITIES 1,815 (1,751)
1,464 243 Net increase/decrease in cash and cash equivalents 7,667 4,944
(251) (99) Effect of exchange rates and changes in reporting 20 (234)
entity on cash & cash equivalents
11,310 9,532 Cash and cash equivalents at the beginning of the 4,836 4,966
year or period
12,523 9,676 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 12,523 9,676
(1) including payments relating to the Toulouse AZF plant explosion, offset by a
long-term liability write-back of 65 millions of euros for the third quarter
2004, 287 millions of euros for the first nine months of 2004.
BUSINESS SEGMENTS INFORMATION
Total
(unaudited)
Amounts in millions of euros
Third quarter 2004 Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 4,899 20,979 5,228 5 31,111
Intersegment sales 3,984 838 220 75 (5,117) -
Total sales 8,883 21,817 5,448 80 (5,117) 31,111
Depreciation, depletion and (872) (212) (187) (9) (1,280)
amortization of tangible assets
Operating income 3,406 752 315 (32) 4,441
Amortization of intangible assets and (6) (31) (28) (10) (75)
acquisition goodwill
Equity in income (loss) of affiliates 132 36 (11) 204 361
and other items
Tax on net operating income (2,005) (236) (91) 58 (2,274)
Net operating income 1,527 521 185 220 2,453
Net cost of net debt (16)
Minority interests and dividends on (69)
subsidiaries' redeemable preferred shares
Net income 2,368
Third quarter 2004 Upstream Downstream Chemicals Corporate Intercompany Total
(special items)
Non-Group sales
Intersegment sales
Total sales
Depreciation, depletion and - - - - - -
amortization of tangible assets
Operating income - - - - - -
Amortization of intangible assets and - - - - - -
acquisition goodwill
Equity in income (loss) of affiliates - - (18) - - (18)
and other items
Tax on net operating income - - 6 - - 6
Net operating income - - (12) - - (12)
Net cost of net debt -
Minority interests and dividends on -
subsidiaries' redeemable preferred shares
Net income (12)
Third quarter 2004 Upstream Downstream Chemicals Corporate Intercompany Total
(adjusted for special items)
Non-Group sales 4,899 20,979 5,228 5 - 31,111
Intersegment sales 3,984 838 220 75 (5,117) -
Total sales 8,883 21,817 5,448 80 (5,117) 31,111
Depreciation, depletion and (872) (212) (187) (9) (1,280)
amortization of tangible assets
Operating income 3,406 752 315 (32) 4,441
Amortization of intangible assets and (6) (31) (28) (10) (75)
acquisition goodwill
Equity in income (loss) of affiliates 132 36 7 204 379
and other items
Tax on net operating income (2,005) (236) (97) 58 (2,280)
Net operating income 1,527 521 187 220 2,465
Net cost of net debt (16)
Minority interests and dividends on (69)
subsidiaries' redeemable preferred shares
Net income 2,380
Third quarter 2004 Upstream Downstream Chemicals Corporate Intercompany Total
Total expenditures 1,381 351 200 (5) 1,927
Divestitures at selling price 114 45 19 7 185
Cash flow from operating activities (1) 2,265 828 289 653 4,035
(1) In the Chemicals segment, this figure amounts to 354 millions of euros
excluding an amount of 65 millions of euros paid relating to the Toulouse AZF
plant explosion, offset by a long-term liability write-back.
BUSINESS SEGMENTS INFORMATION
Total
(unaudited)
Amounts in millions of euros
Third quarter 2003 Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 4,263 16,014 4,182 10 - 24,469
Intersegment sales 2,860 561 165 23 (3,609) -
Total sales 7,123 16,575 4,347 33 (3,609) 24,469
Depreciation, depletion and (841) (228) (182) (13) (1,264)
amortization of tangible assets
Operating income 2,502 335 102 (41) 2,898
Amortization of intangible assets and (3) (24) (37) (6) (70)
acquisition goodwill
Equity in income (loss) of affiliates 36 77 6 148 267
and other items
Tax on net operating income (1,294) (101) (29) 103 (1,321)
Net operating income 1,241 287 42 204 1,774
Net cost of net debt (24)
Minority interests and dividends on (40)
subsidiaries' redeemable preferred shares
Net income 1,710
Third quarter 2003 Upstream Downstream Chemicals Corporate Intercompany Total
(special items)
Non-Group sales
Intersegment sales
Total sales
Depreciation, depletion and - - - - - -
amortization of tangible assets
Operating income - - - - - -
Amortization of intangible assets and - - - - - -
acquisition goodwill
Equity in income (loss) of affiliates - - - - - -
and other items
Tax on net operating income - - - - - -
Net operating income - - - - - -
Net cost of net debt -
Minority interests and dividends on -
subsidiaries' redeemable preferred shares
Net income -
Third quarter 2003 Upstream Downstream Chemicals Corporate Intercompany Total
(adjusted for special items)
Non-Group sales 4,263 16,014 4,182 10 - 24,469
Intersegment sales 2,860 561 165 23 (3,609) -
Total sales 7,123 16,575 4,347 33 (3,609) 24,469
Depreciation, depletion and (841) (228) (182) (13) (1,264)
amortization of tangible assets
Operating income 2,502 335 102 (41) 2,898
Amortization of intangible assets and (3) (24) (37) (6) (70)
acquisition goodwill
Equity in income (loss) of affiliates 36 77 6 148 267
and other items
Tax on net operating income (1,294) (101) (29) 103 (1,321)
Net operating income 1,241 287 42 204 1,774
Net cost of net debt (24)
Minority interests and dividends on (40)
subsidiaries' redeemable preferred shares
Net income 1,710
Third quarter 2003 Upstream Downstream Chemicals Corporate Intercompany Total
Total expenditures 1,258 212 453 (7) 1,916
Divestitures at selling price 85 63 10 (8) 150
Cash flow from operating activities (1) 2,569 269 281 130 3,249
(1) In the Chemicals segment, this figure amounts to 583 millions of euros
excluding an amount of 302 millions of euros paid relating to the Toulouse AZF
plant explosion, offset by a long-term liability write-back.
BUSINESS SEGMENTS INFORMATION
Total
(unaudited)
Amounts in millions of euros
9 months 2004 Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 15,547 57,501 14,797 23 - 87,868
Intersegment sales 10,416 2,034 511 128 (13,089) -
Total sales 25,963 59,535 15,308 151 (13,089) 87,868
Depreciation, depletion and (2,460) (640) (578) (26) - (3,704)
amortization of tangible assets
Operating income 9,360 2,025 661 (140) - 11,906
Amortization of intangible assets and (16) (84) (87) (27) (214)
acquisition goodwill
Equity in income (loss) of affiliates 403 152 (180) 491 866
and other items
Tax on net operating income (5,335) (625) (133) 168 (5,925)
Net operating income 4,412 1,468 261 492 6,633
Net cost of net debt (72)
Minority interests and dividends on (186)
subsidiaries' redeemable preferred shares
Net income 6,375
9 months 2004
(special items) Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales
Intersegment sales
Total sales
Depreciation, depletion and - - - - - -
amortization of tangible assets
Operating income - - - - - -
Amortization of intangible assets and
acquisition goodwill
Equity in income (loss) of affiliates - - (220) - - (220)
and other items
Tax on net operating income - - 73 - - 73
Net operating income - - (147) - - (147)
Net cost of net debt
Minority interests and dividends on 2
subsidiaries' redeemable preferred shares
Net income (145)
9 months 2004
(adjusted for special items) Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 15,547 57,501 14,797 23 - 87,868
Intersegment sales 10,416 2,034 511 128 (13,089) -
Total sales 25,963 59,535 15,308 151 (13,089) 87,868
Depreciation, depletion and (2,460) (640) (578) (26) (3,704)
amortization of tangible assets
Operating income 9,360 2,025 661 (140) 11,906
Amortization of intangible assets and (16) (84) (87) (27) (214)
acquisition goodwill
Equity in income (loss) of affiliates 403 152 40 491 1,086
and other items
Tax on net operating income (5,335) (625) (206) 168 (5,998)
Net operating income 4,412 1,468 408 492 6,780
Net cost of net debt (72)
Minority interests and dividends on (188)
subsidiaries' redeemable preferred shares
Net income 6,520
9 months 2004 Upstream Downstream Chemicals Corporate Intercompany Total
Total expenditures 3,924 893 613 46 5,476
Divestitures at selling price 315 127 68 28 538
Cash flow from operating 7,239 2,952 229 321 10,741
activities (1)
(1) In the Chemicals segment, this figure amounts to 516 millions of euros
excluding an amount of 287 millions of euros paid relating to the Toulouse AZF
plant explosion, offset by a long-term liability write-back.
BUSINESS SEGMENTS INFORMATION
Total
(unaudited)
Amounts in millions of euros
9 months 2003 Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 13,553 50,617 12,925 24 77,119
Intersegment sales 8,650 1,712 414 81 (10,857) -
Total sales 22,203 52,329 13,339 105 (10,857) 77,119
Depreciation, depletion and (2,447) (652) (548) (25) (3,672)
amortization of tangible assets
Operating income 7,824 1,570 401 (163) 9,632
Amortization of intangible assets and (11) (72) (106) (16) (205)
acquisition goodwill
Equity in income (loss) of affiliates 195 233 (389) 446 485
and other items
Tax on net operating income (4,144) (453) 100 285 (4,212)
Net operating income 3,864 1,278 6 552 5,700
Net cost of net debt (109)
Minority interests and dividends on (156)
subsidiaries' redeemable preferred shares
Net income 5,435
9 months 2003
(special items) Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales
Intersegment sales
Total sales
Depreciation, depletion and - - - - -
amortization of tangible assets
Operating income - - - - -
Amortization of intangible assets and - - - - -
acquisition goodwill
Equity in income (loss) of affiliates - - (213) 40 (173)
and other items
Tax on net operating income - - 21 (10) 11
Net operating income - - (192) 30 (162)
Net cost of net debt -
Minority interests and dividends on -
subsidiaries' redeemable preferred shares
Net income (162)
9 months 2003
(adjusted for special items) Upstream Downstream Chemicals Corporate Intercompany Total
Non-Group sales 13,553 50,617 12,925 24 - 77,119
Intersegment sales 8,650 1,712 414 81 (10,857) -
Total sales 22,203 52,329 13,339 105 (10,857) 77,119
Depreciation, depletion and (2,447) (652) (548) (25) (3,672)
amortization of tangible assets
Operating income 7,824 1,570 401 (163) 9,632
Amortization of intangible assets and (11) (72) (106) (16) (205)
acquisition goodwill
Equity in income (loss) of affiliates 195 233 (176) 406 658
and other items
Tax on net operating income (4,144) (453) 79 295 (4,223)
Net operating income 3,864 1,278 198 522 5,862
Net cost of net debt (109)
Minority interests and dividends on (156)
subsidiaries' redeemable preferred shares
Net income 5,597
9 months 2003 Upstream Downstream Chemicals Corporate Intercompany Total
Total expenditures 3,554 531 788 45 4,918
Divestitures at selling price 309 120 797 74 1,300
Cash flow from operating 7,024 3,312 96 (227) 10,205
activities (1)
(1) In the Chemicals segment, this figure amounts to 730 millions of euros
excluding an amount of 634 millions of euros paid relating to the Toulouse AZF
plant explosion, offset by a long-term liability write-back.
CONSOLIDATED STATEMENTS OF INCOME (Impact of special items)
Total
(unaudited)
9 months 2004 9 months 2003
Amounts in millions of euros Adjusted for Special items Consolidated Adjusted for
special items statement of special items
income
Total sales 87,868 - 87,868 77,119
Operating expenses (72,258) - (72,258) (63,815)
Depreciation, depletion, and amortization (3,704) - (3,704) (3,672)
of tangible assets
Operating income
Corporate (140) - (140) (163)
Business segments 12,046 - 12,046 9,795
Total operating income 11,906 - 11,906 9,632
Interest expense, net (116) - (116) (111)
Dividend income on non-consolidated 135 - 135 96
subsidiaries
Dividends on subsidiaries' redeemable (3) - (3) (4)
preferred shares
Other income (expense), net (184) (220) (404) (466)
Provision for income taxes (5,962) 73 (5,889) (4,168)
Equity in income (loss) of affiliates 1,012 - 1,012 868
Income before amortization of 6,788 (147) 6,641 5,847
acquisition goodwill
Amortization of acquisition goodwill (83) - (83) (98)
Consolidated net income 6,705 (147) 6,588 5,749
of which minority interest 185 (2) 183 152
NET INCOME 6,520 (145) 6,375 5,597
Third quarter Third quarter
2004 2003
Amounts in millions of euros Adjusted for Special items Consolidated Adjusted for
special items statement of special items
income
Total sales 31,111 - 31,111 24,469
Operating expenses (25,390) - (25,390) (20,307)
Depreciation, depletion, and amortization (1,280) - (1,280) (1,264)
of tangible assets
Operating income
Corporate (32) - (32) (41)
Business segments 4,473 - 4,473 2,939
Total operating income 4,441 - 4,441 2,898
Interest expense, net (33) - (33) (27)
Dividend income on non-consolidated 41 - 41 20
subsidiaries
Dividends on subsidiaries' redeemable - - - (1)
preferred shares
Other income (expense), net (133) (18) (151) (134)
Provision for income taxes (2,264) 6 (2,258) (1,317)
Equity in income (loss) of affiliates 423 - 423 342
Income before amortization of 2,475 (12) 2,463 1,781
acquisition goodwill
Amortization of acquisition goodwill (26) - (26) (32)
Consolidated net income 2,449 (12) 2,437 1,749
of which minority interest 69 - 69 39
NET INCOME 2,380 (12) 2,368 1,710
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