BP profits slump as pandemic batters energy demand

The loss was higher than the $4.8bn loss expected by analysts, and compared with a $10bn profit in 2019. BP said the results were driven by lower oil and gas prices, significant exploration write-offs, pressure on refining margins and depressed demand.

It wrote down the value of oil and gas assets by $6.5bn in response to lower long-term energy price forecasts.

Underlying fourth quarter replacement cost profit, BP's preferred measure of net income, reached a modest $115m against a $86m profit in the previous three months and $2.6bn a year earlier. Analysts had been looking for $440m.

The dividend was maintained at 5.25 cents a share.

Looking forward, BP said it expected "material impacts in downstream as a result of the pandemic, with increased COVID-19 restrictions resulting in lower product demand".

"We expect industry refining margins and utilization to remain under pressure. In our marketing businesses we expect renewed Covid-19 restrictions to have a greater impact on product demand, with January retail volumes down by around 20% year on year, compared with a decline of 11% in the fourth quarter."

BP’s debt pile of $39bn was expected to rise in the first half of the current fiscal year as it continued to invest in the move away from fossil fuels and made redundancy payments to 10,000 staff, but the company said it remained on track to reduce it to $35bn early 2021.

Interactive investor analyst Richard Hunter said BP's outlook "was understandably cautious and somewhat out of its hands, with supply controlled by OPEC and demand currently depressed by the effects of the pandemic".

"The more recent improvements have been reflected in a share price which has risen by 38% since November, although this cannot mask the fact that the shares remain down by 41% over the last year, as compared to a decline of 11% for the wider FTSE100."

"Even so, BP is working hard to grow while transforming and to streamline while venturing into new areas. The company has continued to engender longer term optimism from investors, with the market consensus of the shares as a 'buy' remaining intact.”