BP shares rise as oil giant more than doubles profit in bumper 2018
Oil major BP’s profit more than doubled in 2018, its fourth-quarter financial results showed today, sending shares up five per cent to 545.7p in early trading.
The figures
BP grew profit to $9.383bn (£7.19bn) in profit attributable to shareholders for the full year, up from $3.389bn in 2017.
Return on average capital was 11.2 per cent compared to 5.8 per cent in 2017.
Operating cash flow for 2018 was $26.1bn, up from $24.1bn the previous year.
The company made $3.2bn in payments in 2018 in connection with the Gulf of Mexico oil spill.
It made $3.5bn of divestments in 2018 and said it planned more than $10bn in the next two years.
A dividend of 10.25 cents was announced for the fourth quarter, up 2.5 per cent on a year previously.
Further reading: BP pledges more transparency on climate change
Why it's interesting
Analysts welcomed BP's performance against a backdrop of stark fluctuations in the value of oil, but bemoaned its exposure to debt.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Overall a decent set of numbers for BP, however its high debt levels and wafer thin dividend cover still make it vulnerable to an economic slowdown or a drop in demand. In its favour, break-even costs are lower than a year ago, but a sustained move below $50 a barrel, would raise further concerns, about the company’s ability to increase returns to shareholders."
John Moore, senior investment manager at Brewin Dolphin, added: “Despite a volatile oil price at the tail end of last year, BP more than doubled profits in 2018 as it showed cost, capital, and operational discipline across its businesses. The company is aware of the changing energy landscape and is active in responding to that by going through significant internal changes, in addition to external moves such as its deal to purchase BHP Billiton’s shale gas assets. While small at this stage, the acquisition of electric vehicle charging company, Chargemaster, also offers a foothold in the electric car future.
"2019 may well be a year of further oil price volatility and additional industry change; however, the company has shown a great deal of resilience and an ability to adapt to a rapidly changing energy landscape, which leaves it well placed.”
Read more: BP pushes for South Africa amid new diesel rules
What BP said
Chief executive Bob Dudley said: “We now have a powerful track record of safe and reliable performance, efficient execution and capital discipline. And we're doing this while growing the business – bringing more high-quality projects online, expanding marketing in the downstream and doing transformative deals such as BHP. Our strategy is clearly working and will serve the company and our shareholders well through the energy transition.”