By Shadia Nasralla
LONDON (Reuters) -BP will review its portfolio of assets and consider further cost cuts as part of a drive to do better for shareholders, the oil major said on Tuesday, as it reported a second-quarter profit that easily beat expectations.
Under pressure to improve profitability, not least from activist investor Elliott, CEO Murray Auchincloss earlier this year announced plans to sell $20 billion of assets through to 2027, reduce spending and share buybacks, and cut costs.
On Tuesday, he signalled further action might follow, without giving details.
“We will conduct a thorough review of our portfolio of businesses to ensure we are maximizing shareholder value moving forward – allocating capital effectively. We are also initiating a further cost review,” Auchincloss said.
“BP can and will do better for its investors.”
Auchincloss said the decision was taken in tandem with Albert Manifold, who will replace Helge Lund as Chair next month. Lund had come under pressure for his backing of BP’s ill-fated foray into renewables.
BP has a target to cut costs by $4-$5 billion from 2023 levels by the end of 2027, of which it has achieved $1.7 billion, it said.
The company posted a second-quarter underlying replacement cost profit, or adjusted net income, of $2.4 billion, down 14% from last year’s $2.8 billion, but easily beating the average $1.8 billion in a company-provided poll of analysts.
The quarterly performance benefited from a 33% profit increase in BP’s customers and products business, driven by strong oil trading results, higher volumes, and a 20% rise in earnings at its Castrol lubricants unit, which the company plans to sell.
BP said it has achieved $3 billion in divestments out of its $3-$4 billion target for 2023.
Its quarterly dividend will rise to 8.32 cents from 8 cents in the first quarter and it will keep the pace of its share buyback programme, making a further $750 million of purchases by the time of its third-quarter results, it said.
BP’s shares have underperformed rivals since its 2020 shift towards renewables under former CEO Bernard Looney.
Since Auchincloss’s strategy overhaul in February, BP’s shares have fallen by around 3.5%, contrasting with gains of around 2.4% for rivals Shell and ExxonMobil, as of Monday.
(Reporting by Shadia Nasralla. Editing by Mark Potter and Louise Heavens)
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