BP Q4 Results Miss View, Posts Hefty Annual Loss; Stock Dips

British oil major BP Plc reported Tuesday a replacement cost profit in its fourth quarter, compared to loss last year, despite sharply lower revenues amid Covid-19 pandemic crisis. The quarterly profit and revenues missed market estimates. The company also posted a hefty loss in its fiscal 2020.

BP shares were losing around 3 percent in London trading and around 5 percent in the pre-market activity on the NYSE.

Bernard Looney, Chief Executive Officer, said, “2020 will forever be remembered for the pain and sadness caused by COVID-19… Road and air travel are down, as are oil demand, prices and margins….We expect much better days ahead for all of us in 2021.”

Going ahead, the company projects oil demand to recover in 2021, however, the speed and degree of the rebound depends on governments’ policies and individuals’ self-imposed actions as vaccine distribution proceeds.

Meanwhile, BP expects the US gas market to tighten in 2021 as supply declines and demand for LNG exports recovers. The current tightness on global LNG markets and higher US gas prices will lift other regional gas prices.

Further, BP announced a quarterly dividend of 5.25 cents per ordinary share or $0.315 per ADS, which is expected to be paid on March 26.

Regarding its net debt, BP’s Chief Financial Officer Murray Auchincloss said the company remains on track to meet its target of $35 billion between the fourth quarter of 2021 and first quarter of 2022, which will trigger the start of share buybacks.

BP expects proceeds from divestments and other disposals of $4-6 billion in 2021, weighted toward the second half.

For the fourth quarter, replacement cost or RC profit was $825 million, compared to last year’s loss of $4 million. RC profit per ADS was $0.24, compared to break even a year ago.

Underlying RC profit was $115 million, compared to $2.57 billion a year ago. Underlying RC profit per ADS was $0.03 compared to $0.76 last year.

On average, eight analysts polled by Thomson Reuters expected earnings of $0.08 per share. Analysts’ estimates typically exclude special items.

The fourth-quarter attributable profit to shareholders was $1.36 billion, significantly higher than $19 million in the prior year. Earnings per ADS was $0.40 compared to $0.01 last year.

The latest reported result included $2.3 billion gain on disposal from the sale of the company’s petrochemicals business.

BP’s results improved significantly from sequential third quarter, which reported RC loss of $644 million, underlying RC profit of $86 million, and attributable loss of $450 million.

Total revenues and other income was $48.57 billion, down from $72.17 billion year ago. The fourth-quarter sales and other operating revenues declined to $44.79 billion from $71.11 billion last year. Analysts expected revenues of $46.61 billion.

Revenues, however, increased sequentially.

For fiscal 2020, RC loss was $18.10 billion, compared to profit of $3.52 billion a year ago. Underlying RC loss was $5.69 billion, compared to profit of $9.99 billion last year. Total revenues and other income were $183.50 billion compared to $282.62 billion in the prior year.

In London, BP shares were trading at 258.40 pence, down 3.26 percent.

In pre-market activity on the NYSE, BP shares were losing 4.6 percent to trade at $21.18.

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