BP boss vows to ‘reset’ strategy after annual profits slump
The FTSE 100 firm reported a 36% drop in profits to £7 billion, as speculation grows that it will turn away from renewables to improve returns.
BP’s boss has pledged to “fundamentally reset” the firm’s strategy amid wide-ranging expectations that it will scale back its renewables projects, as annual profits slumped by more than a third.
The FTSE 100 firm reported a 36% drop in underlying replacement cost profits – the company’s preferred earnings measure – to 8.92 billion dollars (£7.22 billion) in 2024 from 13.84 billion dollars (£11.21 billion) in 2023.
Fourth quarter earnings fell by more than expected, down 61% year-on-year to 1.17 billion US dollars (£947 million) – the weakest result since 2020 – amid stagnant oil prices and weak oil refining margins.
On a statutory basis, BP saw replacement cost profits tumble to 750 million US dollars (£607 million) last year from 16.18 billion US dollars (£13.1 billion) in 2023.
Chief executive Murray Auchincloss said: “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.”
He said it would be a “new direction for BP”, with the firm set to unveil further details at a keenly awaited strategy update on February 26.
BP also said it would review its 2025 share buyback target and announce these plans as part of its capital markets day later this month.
The figures follow just days after US activist investor Elliott Investment Management was widely reported to have bought a stake in BP, which sent shares in the firm leaping higher on Monday on investor hopes it will spur a strategy rethink and board overhaul.
BP’s shares have languished in the past two years on investor concerns over a shift under previous boss Bernard Looney towards renewable energy.
Its close FTSE 100 rival Shell also revealed a steep profit drop when it reported at the end of last month as the sector has been knocked by weaker oil prices and lower demand for the fossil fuel, but BP’s profit woes appear more acute.
BP delayed its strategy update until February 26 to allow Mr Auchincloss to recover after a planned medical procedure.
The event will be watched closely, given the latest set of results and Elliott’s attention, with industry experts forecasting a further move away from renewable energy, which had been pursued by Mr Auchincloss’s predecessor.
Mr Auchincloss was appointed to the top role in January last year, having been acting chief executive since September 2023 following the surprise resignation of Mr Looney after BP’s former boss failed to disclose his past relationships with company colleagues.
It is thought that Elliott – which has not commented or disclosed the size of stake bought – could push for further divestment of clean energy business segments as part of a renewed switch back towards traditional oil and gas, mirroring others in the industry.
Mr Auchincloss has already spun off BP’s offshore wind business in a joint venture while he is looking to offload its onshore wind arm.
The group has been slashing costs in the face of tougher trading, recently announcing it will cut more than 5% of its workforce with moves to axe 4,700 jobs across its global workforce and 3,000 contractor roles.
BP said on Tuesday it had made “strong progress” on its aim to deliver savings of 2 billion US dollars (£1.6 billion) by the end of 2026, with 800 million US dollars (£648 million) stripped out in 2024.
Russ Mould, an analyst at the investment firm AJ Bell, said the drop in profit “provided plenty of fodder” for Elliott, having “done little to reassure other shareholders that the current plan is working”.
He added: “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.”
