BP PLC (LSE:BP.) reported faltering second-quarter profits on Tuesday morning, though a hefty dividend hike and new share buyback looked to keep investors on side.
According to analysts, BP's report of lower profits is unlikely to be a deliberate move, despite speculation that the oil giant may be weary given climate or cost-of-living fuelled scrutiny.
“I don’t think these companies would seek to depress profits as that would damage shareholders’ view of the company,” AJ Bell analyst Laith Khalaf said, “the quarterly figures can be quite volatile”.
Rather, results seem to show the clear benefit the likes of BP and Shell PLC (LSE:SHEL, NYSE:SHEL) gained from last year’s high fuel prices, with both having come in with lower-than-expected results in recent weeks.
FTSE 100-listed BP reported an 80% yearly fall in second-quarter profit to US$1.8bn on Tuesday, having announced US$9.3bn last year and at US$3.1bn in 2021.
Even so, there was a 10% hike in its interim dividend from 6.006 to 7.27 cents and a further US$1.5bn share buyback is planned, so maybe things aren't too bad.
As Hargreaves Lansdown analyst Derren Nathan explained: “BP has been unable to escape the heavy blow to profits dealt by lower commodity prices this earnings season.”
Others largely agree, pointing to an increasingly-industry-wide focus on pleasing shareholders as updates reflect disappointing, but probably normalised, results this year after Ukraine-war-driven gains in 2022.
“Most [now] place a high priority on shareholder returns despite their results taking a beating this year following the record performance we saw from the industry,” City Index’s Joshua Warner said.
Shares rose 0.5% to 485.6p.