BP has swung to a mammoth annual loss of 5.7bn US dollars (£4.2bn) after oil prices and demand tumbled amid the pandemic.
The oil giant’s hefty underlying replacement cost losses – its most-watched measure – compare with profits of 10bn US dollars (£7.3bn) in 2019 and come despite a bounce-back in the second half of the year as oil prices started to recover.
On a reported basis, BP tumbled into the red with replacement cost losses of 18.1bn US dollars (£13.2 billion) against profits of 3.5bn US dollars (£2.6bn) a year earlier after significant write-downs.
BP’s results for the final quarter of 2020 show it made underlying profits of 115m US dollars (£84m), having swung out of the red in the previous quarter, but the figures were worse than expected.
It said oil prices have risen since the end of October, helped by the rollout of the coronavirus vaccine worldwide, while it also expects demand to bounce back this year.
Chief executive Bernard Looney said: “2020 will forever be remembered for the pain and sadness caused by Covid-19. Lives were lost, livelihoods destroyed.
“Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins.”
He said 2020 was also a “pivotal year” for the company as it launched a net-zero goal and overhauled itself in a move that saw nearly 10,000 jobs go.
Mr Looney added: “We expect much better days ahead for all of us in 2021.”
David Barclay, head of the Aberdeen office at wealth manager Brewin Dolphin, said BP’s annual results were worse than expected.
He said: “BP was expected to post a significant loss for 2020, which is unsurprising given the many challenges the company – and the wider oil and gas sector – faced last year.
“However, today’s results are worse than consensus predictions anticipated, laying bare just how much of a toll Covid-19 has taken on its businesses. No doubt BP is in transition and, as this update shows, it will require a lot of financial headroom to manage itself through that process.
“Debt levels remain stubbornly high for a business that needs to invest, and will require further progress in asset sales to continue deleveraging.
“While BP transforming itself to remain relevant in a de-carbonised world is a positive move, there is still a delicate balancing act for the company to play in the months and years ahead, evolving its business whilst attempting to remain attractive to investors.”