BP Announces Strategy Overhaul Following Significant Profit Decline
CEO Murray Auchincloss reveals plans to reassess company's direction amid a 36% drop in annual profits and pressure from activist investors.
British oil giant BP has reported a significant decrease in its annual profits, prompting chief executive Murray Auchincloss to announce plans for a comprehensive strategy overhaul.
For the financial year ending 2024, BP reported a 36% decline in underlying replacement cost profits, which fell to $8.92 billion (£7.22 billion) compared to $13.84 billion (£11.21 billion) in 2023.
The company’s fourth quarter results showed an even steeper drop, with profits plummeting 61% year-on-year to $1.17 billion (£947 million).
This figure marks the weakest quarterly earnings since 2020, attributed to stagnant oil prices and diminished refining margins.
On a statutory basis, replacement cost profits fell dramatically from $16.18 billion (£13.1 billion) in 2023 to $750 million (£607 million) in the past year.
In light of these results, Auchincloss stated, "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 indicated that a detailed plan outlining BP’s new direction will be presented on February 26.
Simultaneously, BP announced it would reassess its 2025 share buyback target at their upcoming capital markets day.
This news follows reports of activist investor Elliott Investment Management acquiring a stake in BP, which led to a rise in the company's share prices amid speculation regarding a potential overhaul of corporate strategy and governance.
Elliott’s involvement has raised concerns over BP’s strategic focus, particularly its investments in the renewable energy sector, which have come under scrutiny after previous management pursued aggressive targets under former CEO Bernard Looney.
Auchincloss, who took over the role in January 2024 after Looney’s resignation, continues to face pressure from investors eager for more definitive strategic actions.
In a parallel statement, BP disclosed plans to cut approximately 4,700 jobs, equating to a reduction of over 5% of its global workforce.
The company is also seeking to realize savings of $2 billion (£1.6 billion) by 2026, with $800 million (£648 million) achieved within 2024.
Industry analysts have noted the steep decline in profits and the strategic uncertainties, indicating that BP must present a compelling strategy to regain investor confidence.
The company continues to compete with close rival Shell, which recently reported similar profit declines, reflecting broader challenges resulting from lower oil prices and reduced fossil fuel demand worldwide.
The upcoming strategy update is anticipated to clarify BP’s long-term goals as the firm navigates a shifting energy landscape under mounting pressure from both external investors and internal cost-saving mandates.
For the financial year ending 2024, BP reported a 36% decline in underlying replacement cost profits, which fell to $8.92 billion (£7.22 billion) compared to $13.84 billion (£11.21 billion) in 2023.
The company’s fourth quarter results showed an even steeper drop, with profits plummeting 61% year-on-year to $1.17 billion (£947 million).
This figure marks the weakest quarterly earnings since 2020, attributed to stagnant oil prices and diminished refining margins.
On a statutory basis, replacement cost profits fell dramatically from $16.18 billion (£13.1 billion) in 2023 to $750 million (£607 million) in the past year.
In light of these results, Auchincloss stated, "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 indicated that a detailed plan outlining BP’s new direction will be presented on February 26.
Simultaneously, BP announced it would reassess its 2025 share buyback target at their upcoming capital markets day.
This news follows reports of activist investor Elliott Investment Management acquiring a stake in BP, which led to a rise in the company's share prices amid speculation regarding a potential overhaul of corporate strategy and governance.
Elliott’s involvement has raised concerns over BP’s strategic focus, particularly its investments in the renewable energy sector, which have come under scrutiny after previous management pursued aggressive targets under former CEO Bernard Looney.
Auchincloss, who took over the role in January 2024 after Looney’s resignation, continues to face pressure from investors eager for more definitive strategic actions.
In a parallel statement, BP disclosed plans to cut approximately 4,700 jobs, equating to a reduction of over 5% of its global workforce.
The company is also seeking to realize savings of $2 billion (£1.6 billion) by 2026, with $800 million (£648 million) achieved within 2024.
Industry analysts have noted the steep decline in profits and the strategic uncertainties, indicating that BP must present a compelling strategy to regain investor confidence.
The company continues to compete with close rival Shell, which recently reported similar profit declines, reflecting broader challenges resulting from lower oil prices and reduced fossil fuel demand worldwide.
The upcoming strategy update is anticipated to clarify BP’s long-term goals as the firm navigates a shifting energy landscape under mounting pressure from both external investors and internal cost-saving mandates.
