BP has pledged to “fundamentally reset” its strategy and improve its performance as the struggling oil major reported a steep drop in profits for the final quarter of last year.
On Tuesday, the group reported underlying profits of $1.17bn in the period, roughly half of the total for the previous quarter and significantly below the $2.99bn it made in the final three months of 2023.
BP made $8.9bn in underlying profit for the full year, compared with $13.8bn in 2023, the worst annual result since it lost $5.7bn in 2020, the year of the Covid pandemic.
The pressure on BP intensified this week after it emerged that US activist investor Elliott Management had built a stake in the company.
While the size of Elliott’s stake is unclear, another BP shareholder said that the group’s holding meant that change at the London-listed oil major was now inevitable.
Shares were flat in early trading on Tuesday after jumping as much as 8 per cent on Monday following the disclosure of Elliott’s stake over the weekend.
Chief executive Murray Auchincloss has faced calls to set out a fresh strategy after several quarters of disappointing results, concern over the group’s aggressive push into renewables and a share price that has lagged behind rivals over the past year.
In a statement on Tuesday, Auchincloss pledged to increase “cash flow and returns” and said he would unveil “a new direction for BP” at an investor day on February 26.
“We have been reshaping our portfolio — sanctioning new major projects, and focusing our low-carbon investment — and we have made strong progress in reducing costs,” he said.
He added that the company planned “to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns”.
Investors have pushed BP to move away from its strategy under previous chief executive Bernard Looney of gradually reducing its oil production and boosting green energy.
Under Auchincloss, the group has already scaled back its renewable projects and spun off its offshore wind projects into a separate joint venture.
But the biggest problem for BP in the past year was its refining business, as the margin it made on each barrel fell to $17.70 from an average of $25.80 in 2023.
Its refining and trading businesses swung from an underlying pre-tax profit of $3.8bn in 2023 to a pre-tax loss of $67mn last year. BP has since put its Gelsenkirchen refinery in Germany up for sale.
Analysts have speculated that BP will have to cut its shareholder returns as it tries to boost its growth and pay down debt. But in the fourth quarter BP held its dividend and promised another $1.75bn of share buybacks.