BP’s second quarter profit jumped on stronger refining margins, the company said on Tuesday, though a Russia hit in the first quarter more than ensured a weaker first-half bottom line.
By its preferred metric, BP’s replacement cost more than trebled to $7.65 billion in the second quarter of 2022, from $2.38 billion a year earlier. On an underlying basis, RC profit was $8.45 billion, up from $2.80 billion. Pretax profit surged to $14.06 billion from $5.14 billion.
Total second-quarter revenue improved 85% to $69.51 billion from $37.60 billion.
BP swung to a first half loss, however. It posted a replacement cost loss of $15.40 billion, swinging from a profit of $5.71 billion a year earlier.
Profit was wiped out by a first quarter $24.4 billion post-tax charge related to BP’s exit from its near 20% stake in Russian business Rosneft, following the invasion of Ukraine.
BP lifted its quarterly dividend by 10% to 6.006 cents per share from 5.460 cents a year prior. The first-half payout is up 7.1% to 11.466 cents.
It executed $2.3 billion worth of buybacks in the second quarter before completing the remainder of a $2.5 billion programme in late July.
What’s more, BP plans to complete a $3.5 billion buyback before announcing third-quarter results, which are scheduled for November 1.
‘On average, based on BP’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, BP continues to expect to be able to deliver share buybacks of around $4.0 billion per annum and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025,’ it said.
Brent was priced at $100.42 a barrel on Tuesday, down from $100.70 late Monday and having dropped below $100 in earlier trade.
BP shares were up 4.5% early Tuesday, well outperforming a lower FTSE 100.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,405.23
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Hang Seng: down 2.6% at 19,639.48
Nikkei 225: closed down 1.4% at 27,594.73
S&P/ASX 200: closed up 0.1% at 6,998.10
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DJIA: closed down 46.73 points, or 0.1%, at 32,798.40
S&P 500: closed down 11.66 points, or 0.3%, at 4,118.63
Nasdaq Composite: closed down 21.71 points, or 0.2%, at 12,368.98
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EUR: down at $1.0246 ($1.0270)
GBP: down at $1.2223 ($1.2270)
USD: down at JP¥130.90 (JP¥131.85)
GOLD: up at $1,774.09 per ounce ($1,766.01)
OIL (Brent): down at $100.42 a barrel ($100.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday’s key economic events still to come
1000 EDT US job openings & labour turnover survey
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Annual house price growth in the UK accelerated slightly in July on an annual basis, while on a monthly basis, the measure rose by the 12th month in succession, though at a slower pace than in June. Mortgage lender Nationwide’s latest tracker showed house prices surged 11% year-on-year in July, quickening slightly from a 10.7% hike in June. The monthly rise came in at a more modest 0.1% in July. House prices had risen 0.2% in June from May. Growth fell short of FXStreet cited consensus, however. Annual growth had been forecast to quicken to 11.5% and monthly growth of 0.3% was expected.
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Ireland’s manufacturers saw a ‘challenging’ month in July, survey results from S&P Global and AIB showed, with output struggling to keep up as new orders slump. The headline AIB Ireland manufacturing purchasing managers’ index slid to 51.8 in July versus 53.1 in June. ‘Although still above the neutral level of 50.0, the latest figure was indicative of the slowest improvement in the health of the sector since January 2021,’ AIB explained.
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BROKER RATING CHANGES
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Exane BNP cuts HSBC to ’neutral’ (outperform) - price target 750 (730) pence
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RBC reinitiates National Express with ’outperform’ - price target 250 pence
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COMPANIES - FTSE 100
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JD Sports named Regis Schultz as its new CEO, after an ‘extensive executive global search process’. Schultz will join JD in September. There will be a brief handover process alongside interim CEO Kath Smith. Smith will then resume her former role of senior independent director. ‘Regis brings with him a wealth of retail experience as CEO, including of a UK-listed retail business, and across retail categories including home, fashion, electrical sporting goods and food. In particular, he has a strong track record of effecting transformational change through digitisation, driving multi-channel growth strategies and working across international markets,’ JD said. He joins from Dubai-based Al-Futtaim Group, which partners with blue-chips in the fields of retail, financial services, real estate and health. Schultz has Al-Futtaim’s president of retail since 2019. ‘The retail division has helped to launch and build world class brands, including Zara, IKEA, Hugo Boss, M&S and Lacoste and operates in Middle East, Asia and North Africa,’ JD explained. In May, former JD executive chair Peter Cowgill left the role with immediate effect. Back in July of last year, the company bowed to shareholder pressure over its corporate governance, agreeing to eventually split its chair and CEO roles. Last month, it named Andy Higginson as its new chair.
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Accounting software firm Sage said it expects organic recurring revenue growth to be toward the top end of its guidance range of 8% to 9% in the financial year that ended September 30. In first nine months of the year, revenue by this measure was £1.33 billion, up 9% from £1.22 billion a year before. Sage cited sales of its Business Cloud solutions.
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COMPANIES - FTSE 250
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Bakery chain Greggs has appointed former Halfords and Pets at Home CEO Matthew Davies as its new chair. He also led Tesco’s UK & Ireland arm. He will take on the post on November 1. Incumbent Ian Durant became the Greggs chair in 2013 meaning he has more than exceeded the time-limits under the UK corporate governance guidelines but last year had been asked to remain amid a change in CEO. Meanwhile, Greggs left its outlook unchanged as it reported a first-half revenue climb. Profit was largely flat, however, amid cost inflation. In the half-year ended July 2, revenue increased 27% to £694.5 million from £546.2 million. Pretax profit inched up just 0.5% to £55.8 million from £55.5 million. Distribution and selling costs ratcheted up 32% to £339.3 million from £257.8 million, as cost inflation dragged the Greggs bottom line. Looking ahead, Greggs said that in the four weeks to July 30, like-for-like sales in company-managed shops were 13% higher annually. ‘Clearly there are considerable uncertainties in the economy as a whole, but we continue to trade in line with our plan and are making good progress against our strategic objective to become a larger, multi-channel business. As such, the board’s expectations for the full-year outcome remain unchanged,’ Greggs said. In its 2021 annual results back in March, Greggs said it didn’t expect ‘material profit progression’ in 2022.
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COMPANIES - SMALL CAP
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Geotechnical contractor Keller reported improved interim earnings and lifted its dividend. Revenue in the half-year ended June 26 climbed 36% year-on-year to £1.34 billion from £984.1 million. Pretax profit rose 12% to £32.7 million from £29.2 million. It lifted its dividend by 4.8% to 13.2 pence from 12.6p. Keller hailed a ‘record first half performance despite the current macroeconomic challenges’. ‘The board’s expectations for the group’s full-year performance remain unchanged, with our usual increase in trading momentum and moderate second half weighting,’ Keller added.
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COMPANIES - GLOBAL
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Mitsui & Co’s first quarter profit improved, but it expects annual profit to fall. In the three months to June 30, the Tokyo-based conglomerate recorded pretax profit of JP¥347.96 billion, about $2.66 billion, rising from JP¥256.19 billion a year prior. Attributable profit surged to JP¥275.00 billion from JP¥191.26 billion. Diluted earnings per share improved to JP¥172.37 from JP¥115.68. Revenue was up to JP¥3.721 trillion from JP¥2.658 trillion. Looking ahead, Mitsui guides for annual attributable profit, for the year ending March 31, 2023, at JP¥800.00 billion, with diluted EPS at JP¥503.79. In financial 2022, it recorded attributable profit of JP¥914.72 billion.
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Tuesday’s shareholder meetings
Caffyns PLC - AGM
Syncona Ltd - AGM
Tanfield Group PLC - AGM
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