BP (BP.) saw first-half profits get much closer to last year’s figure than forecast thanks to higher prices in the three months to 30 June. The average oil price of $69 (£57) per barrel (bbl) in the June quarter contributed to a 19 per cent quarter-on-quarter increase in underlying replacement cost profit to $2.8bn, taking the half to $5.17bn. This was 4.4 per cent below the first six months of 2018, although operating cash flow grew $2bn year on year to $14.2bn.
Upstream adjusted operating income beat consensus forecasts by 10 per cent at $3.4bn for the June quarter, while downstream went the other way, coming in at 13 per cent below forecasts at $1.37bn. Rosneft’s replacement cost profit for the half climbed 19 per cent year on year to $1.2bn off the back of a stronger second quarter, aided by “favourable foreign exchange effects”.
Chief executive Bob Dudley said BP was “right on target” at the midpoint of its five-year plan, which has a gearing range of 20-30 per cent and capex goal of $15bn-$17bn a year. Jefferies said BP was helped along by an effective tax rate of 34 per cent, compared with its estimate of 40 per cent. Additionally, the broker is guiding for annual net income of $2.81bn, against the $2.46bn consensus figure.
Mr Dudley said gas prices would “remain under pressure”, with maintenance and seasonal turnaround to cut output in the North Sea, Angola and the US Gulf of Mexico. This operational weakness could be offset by the first-half weighting of the Deepwater Horizon payments for the year, according to the Royal Bank of Canada.
Bloomberg consensus gives adjusted earnings per share of 53¢ a share this year, rising to 61.4¢ in 2020.
| BP (BP.) | ||||
| ORD PRICE: | 544p | MARKET VALUE: | £111bn | |
| TOUCH: | 543.3-544p | 12-MONTH HIGH: | 603p | LOW: 481p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 498¢* | NET DEBT: | 45% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (c) | Dividend per share (c) |
| 2018 | 144 | 8.90 | 26.4 | 20.00 |
| 2019 | 139 | 7.93 | 23.5 | 20.50 |
| % change | -3 | -11 | -11 | +3 |
| Ex-div: | 8 Aug | |||
| Payment: | 20 Sep | |||
| *Includes intangible assets of $27.8bn, or 136¢ a share | ||||
