BP's chief executive, Murray Auchincloss, has confirmed a "new direction" for the energy giant following a significant slump in 2024 profits. The company reported a 36% drop in underlying replacement cost profits to $8.92 billion (\(£7.22 billion\)) in 2024, compared to $13.84 billion (\(£11.21 billion\)) in 2023.
According to Auchincloss, "Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns." This strategic reset aims to boost shareholder returns and navigate through challenging times, with more details to be revealed at the upcoming Capital Markets Day on February 26.
The company faced a fourth quarter with earnings down 61% year-on-year to $1.17 billion (£947 million), the weakest result since 2020. On a statutory basis, BP's replacement cost profits tumbled to $750 million (£607 million) last year from $16.18 billion (£13.1 billion) in 2023.
Despite these challenges, BP delivered operating cash flow of $27.3 billion and adjusted EBITDA of $38.0 billion in 2024, with upstream production at 2,358mboe/d, 2% higher than 2023.
The coming weeks will be crucial as investors await the strategic update, hoping for bold moves to turn things around. With activist investor Elliott Investment Management reportedly buying a stake in BP, there are expectations of a strategy rethink and board overhaul.
(https://www.independent.co.uk/business/bp-boss-vows-to-reset-strategy-after-annual-profits-slump-b2695909.html) and (https://www.bp.com/en/global/corporate/investors/results-reporting-and-presentations/2025-capital-markets-update.html)
British energy giant BP has announced plans to "fundamentally reset" its strategy after reporting a dramatic 36% drop in profits for 2024, with Chief Executive Murray Auchincloss set to disclose a new direction later this month.
The company's financial performance has taken a significant hit, with annual profits falling to $8.92 billion from $13.84 billion in 2023. Even more striking is BP's net profit decline, which plummeted to $381 million, although the primary focus is on the 36% drop in underlying replacement cost profits to $8.92 billion (£7.22 billion) in 2024.
BP's fourth-quarter earnings haven't looked this weak since 2020, dropping 61% year-on-year to $1.17 billion (£947 million). The company's weaker financial performance is partly attributed to stagnant oil prices and weak oil refining margins. Pressure from Elliott Investment Management has been mounting for a significant business shake-up.
According to Murray Auchincloss, BP's Chief Executive: "Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns."
BP has already achieved significant cost reductions, having delivered structural cost reductions of around $800 million, which the company claims "more than offset the impacts of inflation and energy costs". The company is targeting at least $2 billion in savings by the end of 2026 relative to 2023.
Despite the financial setback, BP has increased its fourth-quarter dividend by 10% to 8.0 cents per share and announced a $1.75 billion share buyback program.
Production levels have actually risen by 2.0% compared to 2023, reaching 2,358 million barrels of oil equivalent per day.
Looking ahead, BP forecasts lower upstream production in early 2025 due to divestments in Egypt and Trinidad. The upcoming Capital Markets Day on February 26 will be significant, as that's when Auchincloss will reveal his vision for BP's future direction, including reviews of financial guidance and capital expenditure plans for 2025.
Russ Mould, an analyst at AJ Bell, noted: "The market has heard a lot from BP about strategy and vision – it wants to see action… A clear and credible plan is desperately needed if BP is going to remain the master of its own destiny."