British oil giant BP announced a sharp decline in profit for the first half of the year on Tuesday, primarily due to asset write-downs and shrinking refining margins.
The group’s net profit fell by 79% year-on-year to $2.1 billion. Revenue also decreased by 8% to $98 billion.
Excluding exceptional items, the replacement cost profit, the most closely watched measure by markets, declined more modestly.
CEO Murray Auchincloss stated that the group is “reducing costs while building momentum for 2025” and a “simpler, more focused, and more valuable” corporate strategy.
BP’s Outlook and Dividend Increase
BP warned of lower oil and gas production in the third quarter compared to the second quarter and fuel margins “sensitive to variations in supply costs.”
The oil major is also increasing its dividend by 10% and extending a share buyback program until the fourth quarter.
Earlier Warnings and Asset Write-Downs
BP had announced in early July that its half-year accounts would suffer “unfavorable adjustments” after tax of “between 1 and 2 billion dollars” in its second-quarter results, mainly related to asset write-downs.
These include charges related to the transformation “of our Gelsenkirchen refinery in Germany,” BP had specified at the time.
In March, the group had announced its intention to reduce the total production capacity of this site from 2025, while engaging in increased production of low-emission fuels.
It had also warned that its refining margins would be “significantly lower” from one quarter to the next and its oil sales would decline.
Criticism from Environmental Groups
“As the world faces record heat, most of us desperately want to see action taken to combat climate change. Unfortunately, it is clear that BP doesn’t care” and “is making billions in profits, paying huge dividends, and doubling down on polluting oil and gas projects,” denounced the NGO Global Witness in a statement on Tuesday.