Friday July 31, 04:08 PM
Total, Eni profits slump in bad week for oil majors
PARIS (AFP) - Total and Eni (Milan: ENI.MI - news) reported huge profit falls in their second-quarter results on Friday, marking a bad week for the majors hit by slumping prices in the worst global downturn since the 1930s.
Oil prices hit a record 147 dollars per barrel in July 2008 but then plunged as the global financial crisis pushed the United States, Europe and Japan deep into recession.
In recent months they have begun to rise unsteadily on signs, notably from stock markets, that prospects for leading economies are improving.
A rise of economic activity would increase demand for energy and tend to underpin or raise the price of oil and gas.
Data for the US economy in the second quarter showed on Friday that activity fell by 1.0 percent, marking four months of contraction running, the first such run since the data began in 1947.
However this was better than shrinkage of 1.5 percent expected by analysts.
Meanwhile, the main New York crude contract in London dipped by 22 cents to 66.72 dollars per barrel.
The French group Total said that its second-quarter net profit fell 54 percent from the figure 12 months earlier to 1.7 billion euros (2.38 billion dollars), above analysts' forecasts for 1.69 billion euros as polled by Dow Jones Newswires.
In Milan, Eni reported a 75.8-percent profits collapse to 832 million euros.
These results were broadly in line with figures reported by Royal Dutch Shell (Amsterdam: RDSA.AS - news) -- down 67 percent to 3.82 billion dollars -- and British giant BP, down 53 percent to 4.39 billion dollars.
All four said that the main factor was the drop in oil prices as a result of the global economic crisis.
"Energy demand is weak. There is excess capacity in the market and industry costs remain high," Shell Chief Executive Peter Voser said.
Total said its production was down seven percent, reflecting lower output levels agreed by OPEC, and the decline in demand owing to the global economic downturn.
For the six months to June, net profit fell by 45 percent to 3.83 billion euros. In the first quarter, Total's earnings were down 35 percent.
Chief executive Christophe de Margerie said that although oil prices had recovered this year, gas prices had fallen and refinery margins were down sharply as demand slumped.
The company said: "Chemicals are still suffering from reduced demand in the Atlantic basin but is benefiting from positive signals about demand in Asia."
In early afternoon trading, shares in Total, the biggest listed company in France, were down by 3.05 percent to 38.77 euros.
In Milan, Eni said that its quarterly adjusted net profit, which excludes exceptional items, had fallen by 60 percent to 902 million euros.
Eni's results were also below analyst forecasts for an adjusted net profit of 1.02 billion euros.
Operating profit was down 58.5 percent to 2.41 billion euros while revenues fell 32.6 percent to 18.27 billion euros.
Daily output in the three months to June was down 2.2 percent but ENI said it still expected full-year 2009 to show an increase of 2.0 percent.
ENI shares were down 4.29 percent in a weaker broader market showing a fall of 0.65 percent.
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