2nd Feb 2021 08:52
(Alliance News) - BP PLC on Tuesday posted a significant swing to annual loss in a year which saw oil demand hammered by the coronavirus pandemic.
The stock was trading 4.1% lower at 256.35 pence in London morning trade, making BP the worst performer in the FTSE 100 early Tuesday. Shares have slumped 44% over the past 12 months.
The London-based oil major stated that for 2020, it swung to a replacement cost loss of USD18.10 billion from a RC profit of USD3.52 billion in 2019. Revenue for the year was USD183.50 billion, down 35% from USD282.6 billion the year prior.
This was despite a more positive performance in the fourth quarter which saw BP swing to a RC profit of USD825 million from a loss of USD644 million in the third quarter of 2020 and a loss of USD4 million in the fourth quarter of 2019.
Replacement cost loss is defined as the replacement cost of inventories sold in the period. It is BP's preferred profit measure.
On an underlying basis, BP's RC loss for 2020 was USD5.69 billion, in line with analysts expectations of a USD5.5 billion to USD5.7 billion loss, and swinging from a profit of USD9.99 billion in 2019.
BP's 2020 loss attributable to shareholders was a startling USD20.31 billion, turning from a USD4.03 billion profit in 2019.
The company said its performance during the year was driven by lower oil and gas prices, significant exploration write-offs and refining margins and depressed demand.
"2020 will forever be remembered for the pain and sadness caused by Covid-19. Lives were lost - livelihoods destroyed. Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins," said Chief Executive Bernard Looney.
He added: "We expect much better days ahead for all of us in 2021."
Brent oil was trading at USD56.98 a barrel of Tuesday morning, down 16% from USD68 a barrel at the start of 2020. The North Sea bench dropped below the USD16 mark in April and during the year, the price of US benchmark West Texas Intermediate even dipped briefly below zero.
Turning to dividends, BP declared a fourth quarter payout of 5.25 US cents, in line with the second and third quarter payouts, but halved from 10.25 cents in the fourth quarter of 2019. This brings the full-year payment to 31.50 cents, down 23% from 41.00 cents in 2019.
Looking ahead, the company said its future financial performance, including cash flows and net debt, will be heavily influenced by the extent and duration of the current market conditions brought about by the Covid-19 pandemic. It added it is "difficult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of Covid-19 will be".
For the fourth quarter of 2020, it said costs directly attributed to Covid-19 were around USD100 million, with the full year amount totalling around USD400 million.
"Looking to the first quarter of 2021, we expect industry refining margins and utilization to remain under pressure. In our marketing businesses we expect renewed Covid-19 restrictions to have a greater impact on product demand, with January retail volumes down by around 20% year on year, compared with a decline of 11% in the fourth quarter," BP added.
Year-end net debt was USD39 billion, down by USD1.4 billion over the quarter and USD6.5 billion over the course of 2020.
Net debt is expected to increase in the first half of 2021 before reducing in the second half of the year, supported by growing operating cash flow and divestment proceeds. BP continues to expect to reach its USD35 billion net debt target around the fourth quarter 2021 and first quarter of 2022. This assumes oil prices in the range of USD45 to USD50 a barrel.
By Ife Taiwo; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
BP