BP profits halve as strategy head steps down amid investor pressure

BP has announced a sharp reduction in its spending plans following a halving of profits for the first quarter of the year. The company’s strategy chief, Giulia Chierchia, has revealed plans to step down amidst intensified pressure from activist investor Elliott Management.

The energy giant reported a subdued profit of $1.38 billion for the first three months of this year, significantly lower than $2.72 billion in the same period last year. This result also fell below the $1.53 billion forecast by analysts, attributed to a fall in refining margins and weaker oil and gas trading performance. Share prices dropped by 2.4 per cent, closing at 353.25p.

Elliott Management, which holds a stake exceeding five per cent in BP, has been pushing for radical changes. This includes deeper cost-cutting measures, divestments, and even exiting renewable energy investments entirely. BP, however, remains committed to owning assets in renewable energy, emphasising their strategic importance for ongoing business operations.

The company has lowered its capital spending for the year by $500 million, reducing it to $14.5 billion. Additionally, BP has announced plans to increase asset sales up to $4 billion. These steps aim to ensure financial flexibility and maintain shareholder confidence amidst ongoing market volatility.

Chief Executive Murray Auchincloss explained that maintaining renewable assets supports BP’s integrated energy strategy, offering customers low-carbon energy options. He observed that the possession of renewable infrastructure allows BP to meet customer demands for natural gas and green energy solutions efficiently.

Oil market dynamics remain a critical challenge for BP, with Brent crude prices trading below assumed levels of $71.50 per barrel. Every dollar below this point impacts BP’s profits by $340 million. Despite this, Auchincloss noted that demand for BP’s products has not experienced a decline, contradicting broader concerns about falling global oil consumption.

The departure of Giulia Chierchia forms part of BP’s broader restructuring efforts. Her responsibilities will be distributed among other departments to streamline operations and improve decision-making. The company’s focus remains on balancing energy transition goals, shareholder returns, and adapting to market fluctuations.

While BP continues to address shareholder pressure from Elliott Management, its ability to navigate these demands while retaining relevance within the renewable energy sector will be closely scrutinised. These decisions will shape its strategic direction and market position in the years to come.