French oil major TotalEnergies TTEF.PA and shipping giant CMA CGM announced further measures to cut prices on Friday, following government pressure for companies to do more to help consumers cope with soaring inflation.
TotalEnergies said it would reduce fuel prices at its service station across France from Sept. 1 until the end of the year, while CMA CGM said it would cut shipping fees by 750 euros per container for imports to France from Asia.
Unlike such countries as Britain and Italy, France has refrained from imposing a so-called supertax on companies whose profits have surged as the energy crisis and supply chain snags have pushed prices sharply higher.
Instead, the government has called on companies, such as TotalEnergies and CMA CGM, to voluntarily help customers cope.
TotalEnergies said it would lower prices by 0.20 euros per litre until Nov. 1, then by 0.10 euros per litre for the rest of the year.
It and CMA CGM said they wanted to support French households at a time of surging cost of living. They did not disclose the effect of the moves on their accounts.
The announcements came as French lawmakers on Friday passed a bill lifting pensions and temporarily freezing rent rises.
French finance minister Bruno Le Maire said the two firms had “listened to me.”
“There were intense negotiations that were carried out to lead to this decision, which is a fair decision, a strong decision,” he said, referring to the price cuts by TotalEnergies in a television interview.
Both companies had already offered customers discounts, but Le Maire had said on Thursday that these were not enough, and he left open the possibility of new taxation in the 2023 budget if they did not go further.
As a result of Friday’s announcements, lawmakers from the government’s Renaissance party said they would withdraw an amendment to a supplementary 2022 budget bill that would create a new tax on energy and shipping firms with revenue over 1 billion euros.
“These two big players have taken significant decisions” lawmaker Stella Dupont told Reuters.
High energy prices are driving energy companies’ profits to record levels, with TotalEnergies’ net income set to reach nearly 32 billion euros, according to a Refinitiv poll of analysts’ forecasts.
Meanwhile, high container shipping rates have boosted the bottom lines of such firms as Marseille-based CMA CGM, which is controlled by the Saade family.
Chief executive Rodolphe Saade told the French Senate on Wednesday that additional taxation would only make the company less competitive against foreign rivals and that the Finance Ministry should first verify that discounts already offered were trickling down to consumers.
In its statement on Friday, TotalEnergies said a tax would penalise its refineries, which it said had lost more than 1 billion euros during the COVID-19 crisis, for which it had requested no government support.
Biraj Borkhataria, analyst at RBC Capital markets, said the company was making huge profits in its downstream division thanks to sky-rocketing refining margins.
“TotalEnergies offering discounts at fuel stations is in line with peers (e.g. Repsol in Spain) and is a way for the company to ease pressure on consumers and businesses in extremely challenging times,” Borkhataria said.
REUTERS