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Oil price drop eats into Total net profit

FRENCH oil giant Total SA said yesterday its net profit plunged 36 percent in the first quarter from a year earlier as oil prices fell sharply amid the global economic downturn.

Paris-based Total, France's largest company by market capitalization, said net profit dropped to 2.29 billion euros (US$2.98 billion) in the January to March period from 3.6 billion euros a year earlier.

In a statement, Total Chief Executive Christophe de Margerie said that despite "an environment dominated by global recession," the fall in Total's replacement cost profit measured in dollars - a key earnings measure for oil firms - was "the most limited drop among the majors."

Replacement cost profit - which at Total fell to US$2.8 billion from US$4.9 billion - is viewed by many analysts as the best measure of an oil company's underlying performance because it excludes changes in the value of crude inventories, measuring the amount it would cost to replace assets at current prices.

Total's shares lost 3.8 percent during the first quarter, but have risen 4.3 percent since the start of the second quarter as equity markets rebounded around the world.


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