BP is set to release its second-quarter results on Tuesday, and analysts are closely watching key metrics. Here’s what you need to know:
Underlying Replacement-Cost Profit
Market consensus suggests that BP is expected to report $3.5 billion in underlying replacement-cost profit for the quarter. This figure is an average calculated from 24 analysts’ estimates. In the same period last year, BP reported a profit of $8.45 billion.
Replacement-Cost Profit Before Interest and Tax
Analysts expect BP’s replacement-cost profit before interest and tax to decline to $6.78 billion from $12.46 billion, based on company-provided market consensus.
Key Factors to Watch
Oil and Gas Prices
Lower oil and gas prices have negatively impacted major energy companies’ revenue and profit expectations, leading to a decline in their share prices throughout the year. This trend was evident in the recent second-quarter profit declines of industry peers Shell and Equinor. Analysts anticipate a similar theme in BP’s results.
Cash Outflows & Shareholder Distribution
BP faced working capital outflows in the first quarter, putting pressure on the company to reassess its shareholder distribution policy compared to other major oil companies. Analysts at Bank of America note that second-quarter results will be crucial, as one-off cash outflows from various factors could limit BP’s ability to distribute dividends to shareholders. As a result, the company may reduce its quarterly share buyback program from $1.75 billion to below $1 billion.
