BP swung back to a small profit in the third quarter, but warned the pace of recovery from the pandemic remained uncertain and was weighing on fuel demand and refining profits.
BP said it faced a volatile trading environment as Asia recovered faster than other regions. "The ongoing impacts of the Covid-19 pandemic continue to create a volatile and challenging trading environment,"it said in a statement on Tuesday.
BP reported a $86 million (€72.8m) profit for the three months to September 30th, beating analysts’ expectations of a loss of $120 million. It followed a record $6.7 billion loss in the previous quarter.
There was a slow recovery in oil prices but extremely weak refining profit margins as fuel demand, particular for aviation fuel, remains weak due to the pandemic.
BP’s refining margin of $6.20 per barrel was up slightly from the previous quarter but less than half of what it was a year earlier.
Underlying profit at its downstream business was $636 million – a third the level it saw a year earlier.
BP said it also saw “a significantly lower oil trading result”.
BP’s shares are down more than 50 per cent this year and remain near 25-year lows, battered by concerns over oil demand as well as investor concerns about BP’s ability to successfully shift to renewable energy from fossil fuels.
The company is reducing its headcount by around 10,000 in the coming months at a cost of around $1.4 billion spread over the next couple of years.
Values fall
Rivals including Royal Dutch Shell and Exxon Mobil have also seen their market values fall in recent months. They will report later this week.
BP slightly reduced its debt in the quarter, and said it expected a further decline in the fourth quarter as a result of asset sales.
Its debt-to-equity ratio, or gearing, including leases, was 37.7 per cent at the end of September, flat on the quarter and up from 35.9 per cent a year ago.
“BP’s future financial performance, including cash flows, net debt and gearing, will be impacted by the extent and duration of the current market conditions,” it said.
“It is difficult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of Covid-19 will be.” – Reuters
