BP CEO promises ‘fundamental reset’ as profits slump
UK supermajor's CEO says 'new direction' imminent as analysts suggest further shift from low carbon could be on the cards
UK supermajor BP saw its profit drop 60% in the fourth quarter of 2024, slightly missing analyst forecasts, as chief executive Murray Auchincloss promised the company is ripe for a “fundamental reset”, with analysts flagging a potential further move away from a green-focused strategy.
BP booked a replacement cost profit, its indicator for net income, of $1.2bn in the fourth quarter of 2024, it said on Tuesday. This is down against the same period the previous year, when it posted $3bn.
The result fell slightly short of analyst forecasts, which were estimating $1.26bn for the quarter.
Weaker refining and fuels margins affected performance, said BP, as well as higher turnaround activity.
The supermajor launched another tranche of share buybacks worth $1.75 billion to be completed before the next round of results.
It also maintained the quarterly dividend stable at 8 cents per common share, which is 10% higher than 2023 levels.
Chief executive Murray Auchincloss said: “We now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns.
“It will be a new direction for BP and we look forward to sharing it at our Capital Markets Update on 26 February.”
The company’s net debt in the quarter was $23bn, $1.3bn lower than the previous quarter. Analysts had expected the debt level to fall.
Operating cash flow for the quarter was $7.4bn, totalling $27.3bn for the full year. Capex for the full year was $16.2bn, in line with guidance.
Share price moves
Higher oil prices have recently supported the BP share price, which in 2025 to date has outperformed the energy sector index SXEP by 3%, noted RBC Capital Markets ahead of the results.
Analysts commenting Elliott’s engagement suggest a board room shake-up may be on the cards along with an increased focus on upstream investments and free cash flow.
“It seems now that Elliot is taking a chance on spurring change as it has with other oil and gas companies,” commented Allen Good, director of equity research at Morningstar.
He added the investor’s strategies could include pursuing “a sale, a US relocation but the most likely would be some sort of strategic change that refocused on oil and minimised low carbon”.
Over the past 12 months, BP’s stock has been down 3%, compared with +6% for Shell, and nearly +8% for ExxonMobil.
Today’s fourth quarter results are the lowest since the height of the Covid 19 pandemic in 2020 for BP, creating additional pressure on Auchincloss to show he has an effective strategy to deliver value for shareholders.
One key question on analysts’ minds ahead of the CMD is whether BP would move away from the energy transition-focused strategy Auchincloss’ predecessor set in 2020, which saw it invest heavily in renewables and set a goal to reduce upstream production.
That strategy did not work out as expected, and has since been hindered by profitability issues for transition businesses, while the energy security concerns fuelled by Russia’s invasion of Ukraine gave way to a new bullish outlook for hydrocarbons.