- BP shares up 5%, among FTSE’s biggest gainers
- New CEO Murray Auchincloss sticks to Looney’s plan
- More share buybacks to come in 2024
BP (BP.) shares were up 5% to 479p in morning trading despite the energy giant reporting a year-on-year plunge in underlying profit from $27.65 billion to $13.83 billion for 2023 due to lower oil prices.
The oil major had generated record profits in 2022 after oil and gas prices soared in the aftermath of the Russia-Ukraine conflict.
Last week, BP rival Shell (SHEL) reported a 29% drop in adjusted full year earnings for 2023 to $28.25 billion due to lower oil prices.
Russ Mould, investment director at AJ Bell, commented: ‘A big plunge in BP’s profit year-on-year is not really big news. Volatile oil prices will inevitably feed through to the company’s bottom line. It is also worth remembering that last year’s profit represented a record level.
‘The fact BP’s latest profit beat expectations makes this a solid start for Murray Auchincloss as its new chief executive. A big share buyback is also helping to get investors on side, as the new boss demonstrates his commitment to returning cash to shareholders.
‘The departure of Bernard Looney under a cloud has left a bit of a vacuum at the top of BP as, to date, the former finance chief Auchincloss has said he will stick with the plan outlined by Looney.’
What does BP boss’ sudden departure mean for the business and the shares?
There was some good news however as BP announced plans to return $1.75 billion to shareholders during the first three months of 2024 through share buybacks.
BP is further committed to $3.5 billion of buybacks over the first half of 2024.
STRONG UNDERLYING PERFORMANCE
CFO Kate Thomson said: ‘BP delivered strong underlying financial performance in 2023 - we raised dividend per ordinary share by 10% and bought back $7.9 billion of shares.
‘We remain focused on strengthening the balance sheet, with net debt falling to $20.9 billion, the lowest level over the past decade.
‘As we look forward, we are staying disciplined, tightening our capital expenditure frame and simplifying and enhancing our share buyback guidance through 2025.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (James Crux) own shares in AJ Bell.
