Profits sink at BP

27th Apr 2011 07:55

Petrochemical giant BP saw replacement cost profit fall in the first quarter of 2011 as the costs of the Gulf of Mexico clean-up continued to pile up.The company announced a 26.87% increase versus the prior quarter's mark in its net profit figure for the three months ended to 31 March, to $7.185bn.The above on a 5.2% rise in its total income, which reached up to $88.312bn, while its production and manufacturing expenses fell sharply, by 13.5% on quarter, to $6.508bn.Its replacement cost profit, however, which excludes inventory revaluations in its calculation, came in lower than a year ago, at $5.481bn, versus $5.598bn. These results seem to have come in modestly below market consensus estimates. Charles Stanley, for instance, had predicted a replacement cost profit of $5.7bn. Of note, and a potential positive at first glance, cash generated from operations improved sharply versus the end of last year, to $2.4bn, although the figure is well below the $7.693bn seen in the same period a year ago. The company has provided the following explanation, "The amounts for the first quarter of 2011 included a net cash outflow of $2.8 billion relating to the Gulf of Mexico oil spill and also included the impact of increases in working capital as a consequence of higher oil prices". Its gains from sales of fixed assets also fell considerably. The company's effective tax rate rose to 37%, from 34% a year back, but excluding extraordinary items it actually fell to 30%. The quarterly dividend expected to be paid on 28 June 2011 is 7 cents per share ($0.42 per ADS). ab