BP Amoco Q1 chems op pfts up 26% to $259m; warns on euro

09 May 2000 15:32  [Source: ICIS news]

LONDON (CNI)--Cost reductions and volume improvements have enabled BP Amoco's chemical operations to achieve a further substantial increase in quarterly earnings but it warned on Tuesday that continuing weakness of the euro plus increasing industry production capacity may curb future recovery.

In announcing another record set of group results, the Anglo-American energy and chemicals giant said that first quarter, replacement-cost operating profits for its chemicals business were up 26% to $259m (Euro290m) from $206m last year. Sales revenues rose 31% to $2.12bn on production up 11% at 5.7m tonne.

The higher production, similar to the record level achieved in the final quarter of 1999, reflected higher reliability and utilisation across the business, said BP Amoco. It also reflected new capacity added last year at the Feluy, Belgium linear alpha-olefins plant, the Chocolate Bayou, Texas polypropylene (PP) facility, the Geel, Belgium purified terephthalic acid (PTA) plant and Yaraco acetic acid operations at Chuanwei, near Chongqing, south west China.

In comparison with the preceding quarter, however, operating profits were down slightly on the adjusted earnings of $266m, while sales were only marginally higher. BP Amoco explained that the benefit of cost controls offset the weaker trading environment caused by continuing weakness of the euro and feedstock rises early in the quarter.

Group chief executive, John Browne, said of the outlook for chemicals that margins in some businesses - particularly commodity products - should strengthen as oil prices stabilise, assuming continuation of firm demand. However, he cautioned that continued weakness of the euro together with rising production capacity may limit the extent of any recovery.

BP Amoco first quarter group replacement cost operating profits before exceptional items were up four-fold, from $677m to $2.68bn. After adjusting for special charges of $30m they totalled $2.71bn. Turnover doubled from $17.98bn to $33.09bn thanks largely to major increases from refining and marketing and exploration and production.

By: Neil Sinclair
+44 20 8652 3214

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