BP shares plunge as profits halve
February 2, 2016, 6:34 pm

Shares in BP have ended the day almost 9% lower after it reported that annual profits had more than halved.
The oil giant said its profits had fallen by 51% to $5.9bn (£4.1bn), compared with $12.1bn in 2014 following a dramatic slide in oil prices.
BP was the biggest faller on the FTSE 100, falling 35.9p to 331p after announcing its biggest loss for more than two decades.

Oil prices fell sharply on Tuesday, with Brent crude down 5.3% to $32.42.

BP`s underlying fourth-quarter profits sank to $196m, compared with $2.2bn for the same period in 2014 and far worse than analysts had expected.

A further 3,000 job cuts were also announced by BP on Tuesday.

Last year, it said 4,000 jobs would go in its upstream division as part of a $2.5bn restructuring programme.

BP said its upstream business, which covers exploration and production, slumped to a $728m loss in the final quarter.

The latest reduction of up to 3,000 jobs by the end of 2017 affects staff and contractors in its downstream segment.

This refers to its refined oil products, such as fuel, lubricants and petrochemicals, that are used to make products such as paint and plastic bottles.

Progress hailed

Bob Dudley, BP chief executive, said the company was making good progress in managing and lowering costs and capital spending.

"We are continuing to move rapidly to adapt and rebalance BP for the changing environment," he added.

Oil prices have been hit by the slowing global economy, the strong US dollar and oversupply.

BP`s dividend will remain unchanged at 10 cents a share for the quarter.

Sanjiv Shah, chief investment officer at Sun Global Investments, said: "The short term looks difficult but shareholders should be encouraged by the fact that a pick-up in prices is expected soon and that BP management are committed to continue paying out current dividend levels."

Michael Hewson, chief market analyst at CMC Markets, said BP faced hard choices: "With average oil prices still trading at multi-year lows so far this year, the question now needs to be asked, how long can BP sustain the dividend at current levels without an imminent pick-up in oil prices?

"How many more jobs will BP need to cut from its already reduced 80,000 workforce in the coming months in order to sustain its payout against a backdrop of a possible ratings downgrade, and lower energy prices for longer?"

BP`s results are the latest in a round of weak fourth-quarter results in the sector.

Last week, Chevron announced its first quarterly loss in more than 13 years.

Shell, which reports its fourth-quarter and full-year results on Thursday, has warned in a trading statement that its underlying profits could be halved.

BP`s shares ended trading 8.7% lower at 335.1p.

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