French oil major Total announces a sharp drop in quarterly profit but says it's paying more to shareholders and will reduce capital spending. David Pollard reports.
Net profit is down 19 per cent in the fourth quarter and below forecasts. Investors may be pacified, though, by a raised dividend - up 3.4 per cent. Total is the fifth largest oil major in the world. Like its peers, it faces a difficult environment. Ishaq Siddiqi of ETX Capital. SOUNDBITE (English) ISHAQ SIDDIQI, MARKET STRATEGIST, ETX CAPITAL, SAYING: ''There's a number of challenges that these companies face in terms of the overall picture with the global economy, of course, the price of oil, which in many ways benefits them but also at the same time can hurt them because it's so volatile. But most of all it's capital expenditure, which is seen as very difficult at the moment.'' Chief exec Christophe de Margerie dropped a 2 to 3 per cent target output rise last year - as, like its peers, it tries to get its house in order. And in fact, capital expenditure is to be cut from 28 to 26 billion dollars over 2014 as Total confronts soaring production costs. SOUNDBITE (English) ISHAQ SIDDIQI, MARKET STRATEGIST, ETX CAPITAL, SAYING: ''Much of this debate around how oil majors have to kind of readjust themselves for this environment going forward has to be about strategy and what sort of strategy management's going to put in place. That's the same case for BP and also Royal Dutch Shell which had very poor numbers for the last earnings season and certainly Total reflects that.'' Even so, Total stresses its output drop isn't as bad as many of its rivals. Exploration will continue this year with, it says, a ''substantial'' 2.8 billion dollar budget.