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British petroleum record profits Original Source Link: (May no longer be active)
http://www.edinburghnews.com/business.cfm?id=489772003http://www.edinburghnews.com/business.cfm?id=489772003
Tue 29 Apr 2003
Tough times behind BP after record earnings
LORD BROWNE, the chief executive of BP, today announced the oil giant had turned in its largest ever quarterly profit as oil prices were boosted by the war in Iraq, strikes in Venezuela and unrest in Nigeria.
Underlying net profits for the first three months of the year came to £2.34 billion, 136 per cent up on the same period last year and at the higher end of analysts’ expectations.
The trading environment had been "significantly more favourable than a year ago" in both production and refining divisions, said Lord Browne, who took a 32 per cent pay cut last year following a 25 per cent fall in annual profits to £8.7bn.
He saw his remuneration cut from £5.7 million in 2001 to £3.9m last year, reflecting the problems that wracked Britain’s biggest listed company over the past year.
After stripping out long-term performance plans, his actual salary and bonus was little changed at £3.031m - the equivalent of almost £12,000 for each working day.
Lord Browne said today: "This is a strong quarterly result. Strategy continues to be implemented with growth on track and strong performance delivery.
"Cash flow is robust, providing the opportunity for a good shareholder return through dividends and share buybacks."
The war in Iraq saw crude oil prices stage their highest annual jump since November 2000, rising almost 25 per cent from a year ago.
A general strike in Venezuela also cut off significant fuel exports to the United States, sending the price of fuel higher around the world and offering BP and its rivals some of the best refining profit margin conditions of recent years.
Earnings at the group’s exploration and production division came to £3bn - more than double that of a year ago, reflecting higher average returns.
In gas, power and renewables, earnings rose to £121.9m, from £69.7m last time, and Lord Browne said the result reflected "improvement in the marketing and trading and natural gas liquids businesses, partly offset by the absence of the Ruhrgas contribution".
BP sold its 25.5 per cent stake in German gas distributor Ruhrgas for £1.5bn at the beginning of the year to help finance its £1.7bn acquisition of a majority stake in Germany’s Veba Oil.
Earnings from refining and marketing almost trebled to £536.6m due to higher worldwide refining margins and improved retail margins, particularly in the United States.
But earnings growth at BP’s chemicals division was more subdued, rising to £87.3m from £67.9m a year ago, as higher volumes and lower costs were offset by weaker margins due to higher raw material costs, particularly in Europe.
One broker said BP’s refining performance was not as good as indicators suggested, and the chemicals arm did badly.
He said: "They looked good at the top but when you read more into the statement there are some uncertainties. They talked about weak demand for chemicals and said refining margins were slightly below average."
Today’s record result comes just a week after Lord Browne warned the current trading environment is difficult and "unusually uncertain".
Speaking at BP’s annual meeting, he said BP’s market-facing businesses - refining, retail and petrochemicals - have been affected by weaker economic growth and rising raw material costs.
Earlier this month, many brokers trimmed their first-quarter forecasts following a trading update from BP which analysts said showed relative weakness in the group’s natural gas, refining, fuel marketing and chemicals businesses in the US.
Last week, the Organisation of Petroleum Exporting Countries (Opec) decided to raise official production quotas, leading to a slump in oil prices.
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