London (AFP) – Britain’s BP said on Tuesday that net profit plunged in the first quarter as the struggling energy giant undergoes a major overhaul back to its fossil fuel business. Profit after tax declined to $687 million, down from $2.3 billion in the first three months of 2024, driven by weaker gas sales and lower refining margins, BP said in a statement. Total revenue fell four percent to slightly under $48 billion.
BP and other oil majors have been hit by a recent slump in crude prices on fears that US President Donald Trump’s tariffs could cause a recession, impacting demand. “We continue to monitor market volatility and changes and remain focused on moving at pace,” chief executive Murray Auchincloss said in an earnings statement. Under pressure from investors, BP is in the midst of a major reset that saw it shelve its once industry-leading carbon-reduction targets to focus on fossil fuel output deemed more profitable. The recent retreat in oil prices has cast doubt over this, however, according to analysts.
BP also announced that the head of sustainability strategy, Giulia Chierchia, will step down from her role in June and will not be replaced. Auchincloss said he remains “confident” in the reset, adding that BP has “already made significant progress.” To the dismay of environmentalists, the new strategy includes cutting cleaner energy investment by more than $5 billion annually. Shares in the company fell over four percent in early deals on London’s top-tier FTSE 100 index, which was trading flat overall. The company on Tuesday also reduced its quarterly share buyback to $750 million, at the lower end of expectations.
The strategy overhaul followed a difficult trading year for BP, which is under pressure from investors to boost its share price as countries look to slash emissions. The company confirmed last week that US activist investment fund Elliott Investment Management has taken a stake of just over five percent in BP. The fund is known for forcing through corporate changes within groups it invests in, according to analysts.
BP at the start of April said chairman Helge Lund, who assumed the role in 2019, would depart the company next year. “Geopolitics and trade tensions are more complex today than for a long time. This uncertainty has had an impact on BP,” Lund told shareholders at the company’s annual general meeting in April. The Norwegian national worked with three CEOs at BP, including helping guide the company through the turbulent Covid years when demand for energy collapsed.
“BP’s making the best it can of a sticky situation,” said Derren Nathan, head of equity research at Hargreaves Lansdown. The group is ramping up its global exploration programme, with around 40 wells planned over the next three years, including as many as 15 to be drilled this year. It recently announced it had made a new oil discovery off the US Gulf coast. “But going into the second quarter, weaker oil prices mean management will be under more pressure than ever to meet the expectations of its biggest shareholder,” Nathan added.
© 2024 AFP
