As Total (TOT) stock struggles to gain health even amidst disappointing Q1 figures, the company has initiated an action plan for the rest of 2020. TOT stock is nearly 7% up in the pre-market.
As the global fight against the coronavirus pandemic continues, some evidence of its effects is coming to light. Some of the world’s largest institutions are reporting disappointing figures, with the oil and gas industry as one of the hardest-hit. French multinational integrated oil and gas company Total has released its report for the 2020 first quarter, much to the disappointment of investors. However, Total S.A. (NYSE: TOT) stock has risen in response.
Per the May 5 report, Total’s net profit came in at $1.8 billion. This is a 35% fall from the $2.8 billion it pulled in, for the same period in 2019. Even with the fall, the figure is still higher than the $1.4 billion analyst average from Refinitiv.
Total has also announced earnings per share. At 0.66 euros, this is 36% lower than the 1.02 euros the company paid in the same period in 2019. Also, for the last dividends for 2019, shareholders have the option to receive either as discounted company shares, or in cash. This decision will however not be finalized until the end of the month.
Total cash flow has also fallen to $4.5 billion, representing a 31% year-on-year plunge. The company reported its return on equity at 9.8% with cash flow from operations falling 64%, from $3.6 billion to $1.3 billion.
According to Total Chairman and CEO Patrick Pouyanné, the company’s recent woes are because of the coronavirus pandemic:
“The Group is facing exceptional circumstances: the Covid-19 health crisis, which is affecting the world economy and creating major uncertainties, and the oil market crisis, with the sharp drop in oil prices since March.”
Total Stock and Action Plan
Total S.A. (TOT) closed yesterday at $33.56, after increasing 0.39%. TOT now has a premarket figure of $35.88, after rising an additional 6.91%. The recent rise, despite the coronavirus pandemic, could be in response to the earnings report. While the figure is much lower than in 2019, it is still ahead of analysts’ expectations.
Generally, however, Total stock has not fared well. In the last month, TOT has lost nearly 8%, with more than 31% in the last three months. Total stock has crashed more than 39% in 2020 and more than 36% in the last 12 months. The recent events in the oil sector play a large role in the company’s problems.
To help the company retain stability, Total has decided on an action plan with a few moves. CEO Pouyanné will receive a 25% fixed pay cut for the rest of the year. Furthermore, the company’s board members will also see a 25% cut in their attendance fees. This will begin with the Annual Shareholders’ Meeting. In addition to this, Total will reduce its net investments by nearly 25%, to $14 billion. Earlier this year, it announced that net investments would be $18 billion. Total will also reduce its operating cost to over $1 billion and save over $1 billion on energy costs.
As the pandemic starts to clear out slowly, companies in the oil sector and other badly-hit industries, may have a fair chance at recovery.