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BP returns to the black

BRITISH PETROLEUM yesterday celebrated its first anniversary since jettisoning Robert Horton as chairman and chief executive with a return to the black in the first half to 30 June, writes Neil Thapar.

The company, which was hit by a pounds 1bn restructuring charge in 1992, reported a net profit of pounds 507m against a pounds 711m loss for the same period last year. Earnings per share amounted to 9.3p compared with a 13.2p loss.

The results, which were better than market expectations, were accompanied by an upbeat statement from David Simon, who replaced Mr Horton as chief executive. Paraphrasing Charles Dickens, he said: 'We are out of the worst of times. We are still not in the best of times but we are in better times.' BP shares closed 2.5p higher at 306p on the news.

The turnaround reflected the impact of a sweeping restructuring over the past year that is expected to cost about 11,500 jobs.

Operating profits from exploration and production, excluding oil stock values, rose from pounds 770m to pounds 990m.

Refining and marketing profits surged from pounds 95m to pounds 321m, the division's best performance since the first quarter of 1991, thanks to improved margins, lower costs and strong performance outside the US and Europe.

The company said it had reduced its cost base by pounds 350m in the first half, the bulk achieved by the refining and marketing division. It is now about half-way through its cost reduction programme and the benefits of further rationalisation are expected to come through over the next few months.

However, trading conditions continued to deteriorate in chemicals due to overcapacity and weak demand in Europe. The division slumped into a pounds 37m operating loss, up from pounds 1m.

Helped by pounds 1bn disposals and reduced capital spending, BP reversed a pounds 650m cash outflow last year into a pounds 737m inflow. Group borrowings, which are largely in US dollars, were cut by dollars 1.1bn to dollars 14.2m ( pounds 9.45m). 3bn.

The second-quarter dividend is held at 2.1p, making a half-year payout of 4.2p against 6.3p.