E Lots Of News Day

The staff of my building just removed the ice buildup outside my apartment windows lest in fall on pedestrians below. I've lived in here for 35 years and this has never been needed before. I also discovered that an unauthorized tech support outfit from a site I don't use has been charging my company $5 plus city and state taxes every month since November. The site, for Yahoo support, is run from the Philippines and seems to be totally fraudulent. If you run into yahoo tech support allegedly out of Virginia, don't let them in. Trying to get the techies themselves to halt demanding payments was impossible. I was asked to tell them all about myself and my business and finally realized that this was simply intimidation.

Again today there is lots of news so I will focus on that. We have 4 reporting companies in our portfolio and one firm reporting important good news.

Business newspaper article

image source

*BP plc was one of the reporting companies. As expected, it reported its first annual loss in a decade because of the virus cutting fuel demand in 2020. Despite the expectation, the share fell 12% in UK trading after the report. It reported EPS of 3¢ while the consensus forecast was for 8¢. It reported sales of $44.7 bn in Q4, which missed the forecast of $46.61 bn by 0.9%. By London's close, BP was at $20.81, down only 6%. Then wiser heads spoke. Now BP is up 1.79% on Wall St.

While obviously, the results were important, I found the commentary on future plans by new CFO Murray Auchincloss to be more interesting and hopeful. He expects BP to pay a resilient dividend in 2021 gaining from deleveraging and divestiture efforts, cutting BP debt to $35 bn and funding share buybacks. He spoke of “reinvent BP” to advance its strategic goals, notably exiting dirty energy.

That means this year capex will be ~$13 bn, including “inorganics” non- oil and gas. $2bn will be invested in low carbon fuel; as much again in “convenience and mobility”, and $5bn in oil and gas refining. This follows cut cash costs in 2020, down 12% from 2019, mostly from layoffs and cost cuts. The headcount drop hit 11% last year and accounted for more than half the planned cuts. The rest will hit this year and next.

BP will provision $1.4 bn for cash outflow for the reinvent program, most of to be taken in the current half fiscal year, to cut cash costs. Mr. Auchicloss expects that pre-tax savings in 2021 will be $2.5 bn lower this year than in 2019, ahead of prior guidance. In 2023-4 the CFO expects another $3-4 bn in pretax saving.

To cut debt BP will do more divestitures like the recent exit from control of Oman block 61. He expects that half the 2025 target of $35 bn will be met in the winter of 2021-2, if oil prices remain at $45-50/bbl and gas prices stay flat.

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William K. 4 weeks ago Member's comment

Quite interesting about BP, and the huge tears because profits are less this year. But since they are still turning a profit I see no big failure. Only greed demands increased profit constantly.

And the CEO pronouncement of greater profits in the future is what CEOs are paid to do. If the CEO announced that profits would steadily decline for the next years they would be out on the street by noon the same day.