BP increases quarterly underlying profit

BP said its net profits excluding one-off items rose 7 per cent in the first quarter compared to last year to just beat forecasts…

BP said its net profits excluding one-off items rose 7 per cent in the first quarter compared to last year to just beat forecasts.

Excluding a non-operating charge of $17 million (€13.7 million), BP's underlying or "clean" net replacement cost profit was $5.282 billion.

BP's shares fell 0.6 per cent to pence per share at 10.15 am, echoing a 0.5 per cent fall in the DJ Stoxx European oil and gas sector index, on the back of a drop in the oil price.

BP's profits would have been much higher were it not for lower oil and gas production and the closure of a key refinery, both related to the impact of hurricanes last year.

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As usual, it was BP's upstream oil and gas production unit that powered the strong results, with higher oil prices more than compensating for a 1.6 per cent drop in output to 4.035 million barrels equivalent of oil and gas.

But the unit underperformed analysts' forecasts, and some investors may be disappointed that profits at this unit only rose 5 per cent at a time when oil prices rose over 20 per cent.

The world's second-largest listed oil firm by market capitalisation said that, including one-offs, its first quarter replacement cost net profit, which excludes changes in inventory values, was $5.265 billion.

This was down 4 per cent compared to the first quarter of 2005, when profits were buoyed by the sale of a gas field.

The smaller refining unit more than made up for the shortfall in expectations at the upstream unit. It significantly beat analysts' forecasts, raising hopes that other oil firms, such as Royal Dutch Shell ,could also post higher-than-predicted refining profits.