The Engineer

BP profits slump

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London-based oil giant BP has revealed a 45 per cent drop in year-on-year profits in 2009 as lower oil prices affected its fourth quarter results.

In response, the group said it would continue its cost-cutting programme into 2010 in a bid to improve profitability. This follows a restructuring of the group that led to a total loss of 7,500 jobs in 2007.

Despite falling profits, oil and gas production increased by more than four per cent in 2009, ahead of the companies one to two per cent expected long-term average growth rate.

Underlying replacement cost profit for the fourth quarter of the year, before non-operating items and fair value accounting effects, was $4.4bn (£2.8bn), up 70 per cent on the same period in 2008.

Full-year replacement cost profit for 2009 was $14bn, down by 45 per cent on the full-year profit of 2008. The company said this was a result of ‘weaker market environment of lower average oil and gas prices and depressed refining margins’.

Earnings in BP’s Refining and Marketing division were also impacted by weak trading conditions, particularly in the fourth quarter.

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