Elf First-Half Profits Beat Forecast, Net Jumps 24%

But Elf's shares had been rising in recent days on expectations of a good showing with analysts looking for around FFr3.5 billion.

Elf's performance was achieved in an environment which was favourable for the oil and gas sector but disadvantageous for chemicals, Jaffre said. This confirms our strategy of concentrating on the development of our core businesses.

The group was on track to attain its goal of a double-digit return on equity by 1998, he said.

Operating income rose 24 per cent to FFr10.38 billion, powered by gains in productivity and increased oil and gas production. Higher oil prices and refining margins compensated for a poor environment in the basic chemicals sector. Among the key divisions, operating income from exploration and production soared 63 per cent to FFr7.23 billion, helped by productivity gains and a four per cent rise in oil and gas production. The impact of a 10 per cent increase in oil prices expressed in francs also gave a boost.

 

Refining, marketing and trading swung to an operating profit of FFr330 million from a loss of FFr 330 million, boosted by gains in productivity combined with a 29 per cent increase in average refining margins in francs.But operating income from chemicals slumped to FFr1.87 billion from FFr3.28 billion, reflecting the non-recurrence of exceptional market conditions in basic chemicals at the start of 1995.

Health operating income rose to FFr991 million from 960 million in spite of an environment which remains difficult.

Jaffre predicted strong volatility in Elf's markets would likely continue throughout the second half. The oil price, while relatively firm since the start of the third quarter, could become unstable again, he said.

In the chemical sector, he said, activity had stabilised after a strong downturn experienced at the end of last year but he cautioned that any deterioriation in the European economic environment would be reflected in this actvitiy.

Net debt stood at 27.91 billion francs, down 9.25 billion from the end of 1995. The debt to equity ratio at the end of June was 28 per cent compared to 38 per cent at the end of December 1995. But the level of net debt at the end of June traditionally constitutes a low point in the year.