BP reports 48% profit drop as strategy chief exits
By Shadia Nasralla
LONDON (Reuters) -BP on Tuesday reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading and announced the departure of its strategy chief as it tries to shore up investor confidence.
CEO Murray Auchincloss is under pressure from activist investor Elliott to improve profitability and cut costs. He has announced plans to sell $20 billion of assets through to 2027.
The British energy giant is abandoning a move to slash hydrocarbon production and boost its low-carbon business, plans pushed by strategy and sustainability chief Giulia Chierchia who announced on Tuesday that she would step down on June 1.
U.S. fund manager Elliott Investment Management had wanted a change of strategy chief as it seeks higher free cash flow through deeper cuts to spending and costs, sources familiar with the matter told Reuters.
BP's shares have lagged peers since its foray into renewables under previous CEO Bernard Looney who brought Chierchia into BP. They were down more than 4% after Tuesday's profit miss, compared with a 1% fall in a wider index of energy companies.
BP posted a first-quarter underlying replacement cost profit, or adjusted net income, of $1.38 billion, below the $1.53 billion expected by analysts in a company-provided poll.
That was down from $2.7 billion a year earlier.
Profit at its gas and low-carbon unit was down around 40%, hit by weaker trading and lower production after asset sales.
Its customers and products business was down by around 47%.
BP said it expects to conduct a heavy refinery maintenance programme in the second quarter, which likely means lower output.
Amid an industry-wide fall in refining profitability, BP's refining margins averaged $15.20 a barrel in the first quarter, down from $20.60 a year earlier.
BP is buying back $750 million in shares for the quarter, at the low end of its guided range. That marks a slowdown from buybacks that totalled $7.1 billion last year. It increased its outlook for asset sales this year to $3-$4 billion from $3 billion.
It said it would spend $14.5 billion this year, around $500 million less than its previous guidance, and reiterated its $13-$15 billion target for next year and 2027.
Global benchmark Brent crude prices averaged around $75 a barrel during the January-March quarter, compared with around $87 a year earlier.
Earlier this month, oil prices went into free fall after U.S. President Donald Trump announced tariffs on trading partners and Brent is now hovering around $66 a barrel.
"In the event of sustainably lower prices, we would expect deflation to become evident across our capital plans and we see around $2.5 billion of further capital flexibility, should we require it," Auchincloss said in a presentation.
"This is equivalent to around $10 per barrel of oil price sensitivity."
Elliott has increased its stake in BP to just over 5%, placing it between top shareholders BlackRock and Vanguard, LSEG data shows.
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