US views of BP have been notoriously at variance with those of British investors. Yesterday's third-quarter figures, lifting the shares 13.5p higher to 365.5p, may yet attract more local converts.
BP is running ahead of its self- imposed post-Bob Horton targets for debt reduction and cost-cutting. In the first nine months there was a pounds 2.2bn turnaround to cash generation of pounds 1.5bn, half due to increased disposals and half to improved operating profits.
Cost-cutting contributed pounds 300m to a pounds 570m improvement in replacement cost operating profits with translation of overseas profits chipping in another pounds 150m and Budget tax changes another pounds 50m. Lower refining margins were offset by currency gains on marketing.
The benefits of cost-cutting, in comparison with US majors, is reflected in a 50 per cent increase in third-quarter profits over the second quarter despite a pounds 1.50 fall in crude oil prices helped by sticky petrol prices.
The chances are that BP will revisit its unchanged dividend policy in a year's time, so a yield of 3 per cent has its attractions.Reuse content