BP Defends Underlying Profits Amidst $5bn Writedown Headlines

BP mounted a defense of its underlying profits this week, even as headlines were dominated by a $5 billion writedown on green energy. The company stressed that the impairment charges are accounting adjustments and do not reflect the cash-generating power of the core business.
The writedowns, related to the cancellation of hydrogen projects and the devaluation of solar assets, are non-cash items. The company argued that its operational cash flow remains robust, supported by a strategic pivot back to fossil fuels.
However, the company did acknowledge some weakness in its profit engines. The oil trading division underperformed in the fourth quarter, and lower crude prices have hit revenues. These factors will dampen the headline profit figures in February.
To bolster its case, the company pointed to its debt reduction. lowering net debt to between $22 billion and $23 billion is tangible proof of financial strength. This metric is a key indicator of the company’s ability to sustain its operations and pay shareholders.
As Meg O’Neill prepares to join in April, the focus on underlying profits is a key message. The company wants investors to look past the one-off charges and focus on the long-term potential of its revitalized oil and gas strategy.