BP’s petchems Q1 profit falls 35% on higher turnaround activity

LONDON (ICIS)–BP’s petrochemicals business posted a 35% fall in underlying replacement cost (RC) profit before interest and tax in the first quarter as a high level of turnaround activity and the sale of its stake in the SECCO joint venture weighed heavily, the UK-headquartered energy major said on Tuesday.

Underlying RC profit before interest and tax at the downstream division amounted to $97m in the first quarter of 2018 compared to $149m in the same period a year ago.

BP’s petrochemical sales volumes amounted to 3.02m tonnes in the first quarter, down significantly from the 3.8m tonnes it sold in the first three months of 2017.

“The result for the quarter reflects an improved margin environment and strong margin optimisation offset by a higher level of turnaround activity,” the company said.

“The result was also impacted by the divestment of our interest in the SECCO joint venture, which completed in the fourth quarter of last year.”

Elsewhere, BP’s lubricants business posted a 16% year-on-year fall in underlying RC profit before interest and tax to $331m, impacted by the adverse lag impact of increasing base oil prices.

Underlying RC profit before interest and tax in the fuels segment, however, jumped 17% from $1.2bn to $1.4bn, driven by a higher refining result.

As a whole, the company’s downstream businesses posted an underlying RC profit before interest and tax of $1.83bn, up 24% year on year.

Commenting on the outlook for the downstream business, BP said it expects seasonally higher industry refining margins in the second quarter but lower discounts for North American heavy crude oil.

It also expects a significantly higher level of turnaround activity.

“We have delivered another strong set of results. Our safe and reliable operations and strong financial delivery have continued into 2018,” said CEO Bob Dudley.

“Underlying profit was up 23% on the previous quarter and was our best quarterly result in three years.”

BP’s overall sales and profit rocketed during the first quarter by 22% and  70% year on year to $68.2bn and $2.53bn, respectively.

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