British oil major BP reported a significant decline in its fourth-quarter profit on February 11, 2025, revealing an underlying replacement cost profit of $1.169 billion. This marks a decrease from $2.99 billion in the same quarter of the previous year, as the company aims to overhaul its strategy amid rising net debt and reduced capital expenditure.
- BP's fourth-quarter profit dropped significantly.
- CEO plans to reset company strategy.
- Net debt increased to nearly $23 billion.
- Shares underperformed compared to competitors.
- Cost-cutting measures include job reductions.
- Upcoming strategic update scheduled for February 26.
BP’s latest earnings report highlights the challenges facing the energy sector, particularly following a year of fluctuating crude prices. The company’s net debt reached nearly $23 billion, increasing by 10% year-on-year. Capital expenditure for the fourth quarter was $3.7 billion, a significant drop from $4.7 billion in the same period of 2024. The decline in profits is attributed to higher corporate costs and lower refining margins.
In response to these challenges, CEO Murray Auchincloss emphasized the need for a strategic reset, stating that BP plans to reshape its portfolio and enhance cash flow and returns. The company has already begun a major restructuring initiative aimed at achieving at least $2 billion in cash savings by 2026. This includes cutting 4,700 jobs and seeking buyers for its Ruhr Oel GmbH refinery assets.
Analysts note that BP has underperformed compared to its peers, with shares falling approximately 9% over the past year. In contrast, Shell has seen a 6% gain. The recent involvement of activist investor Elliott Management has sparked speculation about potential changes in BP’s core oil and gas operations. The company is expected to provide a strategic update on February 26, which may clarify its direction amidst ongoing concerns regarding its capital allocation and profitability.
Overall, BP’s fourth-quarter results reflect significant operational challenges and a commitment to strategic transformation as the company navigates a complex energy landscape. The upcoming strategic update will be crucial for stakeholders looking to understand BP’s future direction and financial health.
