BP profits slide 22 per cent

Oil giant BP today pledged to close the "performance gap" with its rivals after a 22% fall in profits last year.









The world's third biggest oil firm saw profits tumble to $17.29bn (£8.76bn) in 2007 as problems with its US refineries hit the company.



But chief executive Tony Hayward cheered investors with a 25% dividend hike and progress on plans to create a leaner business by stripping out management.



He confirmed BP's plans to cut 5,000 jobs by the middle of next year, as well as slashing the firm's corporate overheads by up to 20%.



He said: "We are absolutely determined to transform our downstream business as a whole. It will not happen overnight, but we believe that the performance gap with our competitors can be progressively narrowed in the next few years."



The results contrast with rival Royal Dutch Shell, which last week posted record profits of almost £14 billion.



The figures cap a turbulent year for BP, whose long-serving head Lord Browne resigned last May after he lied to a court in a bid to block stories about his private life.



It also faced criticism over the March 2005 explosion at its Texas City refinery, where 15 workers died.



But today shares rose almost 3% as hopes grew for a turnaround of the business.



Hargreaves Lansdown equity analyst Keith Bowman said: "Overall, 2007 was not a vintage one for BP, but the early signs for 2008 are encouraging.



"Despite falling profits over both the fourth quarter and the full year, signs of improving prospects for 2008 are tangible."



BP has struggled with lower margins and production problems with its US refineries, which sent its refining and marketing operation to a fourth-quarter loss of $1.34bn (£678.7m).



Mr Hayward said the performance of refining and marketing was "very poor - despite the fact that we have a strong set of assets".



"The principal reason is poor reliability in some of our US refineries, which is compounded by the complexity and overhead structure of the business segment," he added.



This loss left the group's overall underlying fourth-quarter profits at $4bn (£2.02bn) - well below consensus forecasts of $4.3bn (£2.17bn).



But earnings from the firm's exploration and production division lifted 51% to $7.65bn (£3.87bn) after an improved performance in the final three months of last year.



The group began production from five major projects in Angola, Trinidad and the Gulf of Mexico, and enjoyed exploration successes in Azerbaijan and Egypt.



Over the year, BP produced 3.82 million barrels a day of oil equivalent a day from its E&P division - just inside its forecasts of between 3.8 and 3.9 million.



Mr Hayward added: "We made good, step-by-step progress in bringing new oil and gas fields on stream and rebuilding refining capacity during the period."



The chief executive added that he would boost capital spending by more than 10% to up to $22bn (£11.1bn) in 2008 to raise production levels.



The company is looking to produce more than four million barrels of oil a day in 2009, rising to 4.3 million in 2012, and is now pricing an assumption of crude oil prices at around $60 a barrel into its plans.



BP paid out restructuring costs of $250bn (£126.7bn) in the final three months of 2007 and expects to pay a further $1bn (£506.7m) over the course of this year.



Mr Bowman added: "Production levels have finally begun to improve, cost savings from the group's recently announced restructuring plan should begin coming through and a marked increase in the dividend helps provide underlying support to the share price."

Start your day with The Independent, sign up for daily news emails
News
people
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Sport
The RBS Six Nations trophy at the Aviva Stadium ahead of Ireland vs England
rugby
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Kanye West found himself at the centre of a critical storm over the weekend after he apparently claimed to be “the next Mandela” during a radio interview
music
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?