Supermajor BP announces 41% slide in Q3 earnings

Group remain on course for strategic change as earnings dive.

Article updated: 29 October 2019 10:00am Author: Joe Healey

  • The so-called supermajor reports 41% drop in Q3 earnings compared to a year ago.
  • Attributes drop to lower upstream earnings which stemmed from lower prices, maintenance and adverse weather.
  • Despite negative headline figures, upstream production figures remained solid rising roughly 4% since 2018.
  • Investors will welcome early Christmas present following announcement of a dividend of 10.25 cents which will be paid on 20 December.
  • Recommendation: With the group’s underlying fundamentals still solid, we continue to recommend the shares as a ‘Buy’ for investors willing to accept a medium level of risk.

All in all, the positive fundamentals of this morning’s results have been masked by unfavourable externalities. Investors should take heart that the group remains on-course to implement its new strategic direction by building new opportunities in fast-growing downstream markets in Asia, and advancing their energy transition having announced a deal to develop an electric charging network in China.

For investors, one of the most important metrics is gearing which rose slightly to 31.7% due to divestment-related impairment charges. BP already has one of the highest gearing ratios in the sector, something that has led to concerns over the sustainability of future dividends, one of BP’s most attractive attributes to investors. However; robust free cash flow growth should help remove some of the burden moving forward and allow BP to reduce this over time.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.