Cost-cutting returns BP to profits

HEAVY cost-cutting helped British Petroleum, the oil and chemicals group, to return to the black in the first three months of this year with net profits of pounds 325m compared with a pounds 66m loss a year earlier, writes Neil Thapar.

The result, which was better than market expectations, pushed the shares 10p higher to 306p.

Earnings recovered to 6p against a 1.1p loss in 1992. But the first quarter dividend has been halved to 2.1p in line with the group's dividend cut announced last June when Robert Horton was forced to step down as chairman and chief executive.

BP said the profits recovery stemmed from massive cost-cutting involving the loss of 10,000 jobs. The group plans to reduce its total costs by about pounds 600m a year.

Operating profits on a replacement cost basis rose from pounds 423m to pounds 585m. BP's oil exploration and production arm lifted operating profits from pounds 414m to pounds 516m. Refining and marketing profits jumped from pounds 36m to pounds 124m despite weaker industry profit margins. The chemicals division's loss rose from pounds 6m to pounds 14m.

Group interest costs fell from pounds 190m to pounds 170m, thanks to a pounds 600m reduction in net debts to pounds 9.6bn.

View from City Road, page 24

Hamish McRae, page 25

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