TotalFinaElf’s Board of Directors, chaired by CEO Thierry Desmarest, met on September 5, 2000 to review the consolidated financial statements for the six months ended June 30, 2000.
Group sales for the first half 2000 increased by 62% to 52.4 billion euros versus the same period last year.
First half 2000 operating income from business segments rose to 6,812 million euros, a 190% increase versus the pro forma 1999 first half operating income from business segments excluding non-recurring items.
Net income (Group share) excluding non-recurring items increased by 165% to 3,401 million euros for the first six months of 2000 versus the pro forma 1999 first six months.
Reported net income was 3,408 million euros for the 2000 first half versus 2,306 million euros for the pro forma 1999 first half.
Earnings per share excluding non-recurring items rose to 4.83 euros based on a fully-diluted weighted-average number of shares of 704.3 million in the 2000 first half.
Consolidated Accounts (French Gaap – article 215)
| In millions of euros |
First half 2000 |
First half 1999* |
Full Year 99* |
| Sales |
52,422 |
32,314 |
75,035 |
Operating income from business segments
excluding non-recurring items |
6,812 |
2,347(1) |
6,354(1) |
| Net cash flow from operating activities |
7,493 |
3,889 |
7,012 |
Net income (Group share)
excluding non-recurring items |
3,401(2) |
1,284(3) |
3,349(3) |
Earnings per share (euros)
excluding non-recurring items |
4.83 |
1.83 |
4.77 |
* Pro forma
(1) Impact of non-recurring items on pro forma operating income from business segments:
First half 1999 : FAS 121 (- 11 M€).
Full year 1999 : FAS 121 (- 343 M€) and restructuring charges (- 252 M€).
(2) Impact of non-recurring items on first half 2000 net income : gains on asset sales (+ 151 M€), ERIKA related costs (- 86 M€) and other (- 58 M€).
(3) Impact of non-recurring items on pro forma 1999 net income :
First half 1999 : gain on Sanofi-Synthélabo (+ 1,041 M€) and FAS 121 (- 19 M€).
Full year 1999 : gains on asset sales (+ 1,132 M€), FAS 121 (- 453 M€), early retirement plans (- 31 M€), restructuring charges (- 295 M€) and corporate charges (- 206 M€).
Strong performance by all business segments
The average Brent oil price rose sharply to $26.9/b in the 2000 first half from the $13.4/b average price in the 1999 first half. The dollar strengthened against the euro by 13.5%, $0.96/euro in the 2000 first half versus $1.09/euro in the 1999 first half. For the first six months of the year, European refining margins increased to $18.5/t in 2000 from $9.4/t in 1999.
- Changes in the economic environment (dollar, oil prices, European refining margins, and petrochemical margins) had a combined positive effect of 3.9 billion euros on operating income from business segments.
- Growth and synergies/productivity programs added 0.6 billion euros to the first half 2000 operating income from business segments, in line with announced targets.
Operating income by business segment
| In millions of euros |
First half 2000 |
First half 1999* |
Change |
Full Year 99* |
Upstream
Downstream
Chemicals
Total |
4,665
1,207
940
6,812 |
1,294
511
542
2,347 |
+ 261%
+ 136%
+ 73%
+ 190% |
4,119
1,046
1,189
6,354 |
* pro forma, excluding non-recurring items
Upstream: first half 2000 production rose to 2,142 thousand barrels of oil equivalent per day (mboe/d) from 2,109 mboe/d in the first half 1999 (pro forma), an increase of 2%. Liquids production was 1,454 mb/d and gas production represented 688 mboe/d.
Excluding the impact of higher prices on the calculation of production volumes (PSC and buy-back contracts), first half 2000 production increased by 5%.
Downstream: operating income rose by 136%. The sharp increase in European refining margins had a positive impact of 0.4 billion euros on the 2000 first half. Marketing margins in Europe were penalized by higher oil prices. TotalFinaElf continued to further reduce the breakeven point of its refineries.
Chemicals: operating income increased by 73%. First half 2000 improvements in petrochemical margins had a positive impact of 0.2 billion euros on operating income. Intermediates and performance polymers as well as specialty chemicals, benefiting from a stronger global economy, showed continued improvement in results.
Investments and cash flow
- The Group’s net cash flow from operating activities rose to 7,493 million euros in the 2000 first half from 3,889 million euros in the pro forma 1999 first half.
- Gross investments for the 2000 first half were 3,948 million euros compared to 4,161 million euros in the pro forma 1999 first half. In the 2000 first half, Upstream accounted for 72% of investments in the business segments, Downstream 10% and Chemicals 18%.
- Divestments, based on sales prices, were 828 million euros in the first half 2000 versus 707 million euros in the pro forma first half 1999.
- Consolidated equity increased to 29.8 billion euros at June 30, 2000 from 27.7 billion euros at December 31, 1999.
- The Group’s net-debt-to-equity ratio was reduced to 38.2% at June 30, 2000 from a pro forma level of 49.7% at December 31, 1999.
Outlook
In the first half 2000, TotalFinaElf demonstrated its capability to fully benefit from a favorable environment, generating a 16% return on capital employed for the business segments for the twelve months ended June 30, 2000.
The program to improve operating income through a combination of synergies/productivity and growth (+ 4.4 billion euros per year by 2003) is expected to accelerate in 2001 and 2002 due to the implementation of the new organization.
The 2000 CAPEX budget of 8 billion euros is maintained. The 2000-2003 divestment plan has been revised upwards from 8 billion to 10 billion euros.
The generation of 4.4 billion euros of net cash flow (after net investments) in the first half 2000 combined with the planned divestments allow for financing future steady growth as well as a share buy-back program which will be launched in the coming weeks.
For the second half 2000, TotalFinaElf should continue to show good results due the growth in its businesses, further cost reductions and an environment which remains favorable.
* * *
The impact of the new fiscal measures announced by the French Government will be estimated once the specific terms are known. |
