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London 8 February 2022 |
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BP p.l.c. Group results |
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Fourth quarter and full year 2021 |
“For a printer friendly version of this announcement please click on the link below to open a PDF version of this announcement.”
http://www.rns-pdf.londonstockexchange.com/rns/9507A_1-2022-2-7.pdf
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Performing while transforming |
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Financial summary |
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Fourth |
Third |
Fourth |
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quarter |
quarter |
quarter |
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Year |
Year |
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$ million |
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2021 |
2021 |
2020 |
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2021 |
2020 |
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Profit (loss) for the period attributable to bp shareholders |
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2,326 |
(2,544) |
1,358 |
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7,565 |
(20,305) |
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Inventory holding (gains) losses*, net of tax |
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(358) |
(390) |
(533) |
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(2,826) |
2,201 |
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Replacement cost (RC) profit (loss)* |
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1,968 |
(2,934) |
825 |
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4,739 |
(18,104) |
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Net (favourable) adverse impact of adjusting items*(a), net of tax |
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2,097 |
6,256 |
(710) |
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8,076 |
12,414 |
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Underlying RC profit (loss)* |
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4,065 |
3,322 |
115 |
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12,815 |
(5,690) |
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Operating cash flow* |
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6,116 |
5,976 |
2,269 |
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23,612 |
12,162 |
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Capital expenditure* |
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(3,633) |
(2,903) |
(3,491) |
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(12,848) |
(14,055) |
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Divestment and other proceeds(b) |
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2,265 |
313 |
4,173 |
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7,632 |
6,586 |
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Net issue (repurchase) of shares |
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(1,725) |
(926) |
– |
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(3,151) |
(776) |
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Net debt*(c) |
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30,613 |
31,971 |
38,941 |
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30,613 |
38,941 |
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ROACE* (%) |
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13.3% |
(3.8)% |
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Adjusted EBIDA* |
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30,783 |
19,244 |
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Announced dividend per ordinary share (cents per share) |
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5.46 |
5.46 |
5.25 |
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21.63 |
26.25 |
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Underlying RC profit (loss) per ordinary share* (cents) |
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20.53 |
16.48 |
0.57 |
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63.65 |
(28.14) |
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Underlying RC profit (loss) per ADS* (dollars) |
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1.23 |
0.99 |
0.03 |
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3.82 |
(1.69) |
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• Net debt reduced for seventh quarter in a row to $30.6bn end 2021 |
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• 2021 ROACE 13.3% |
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• Delivering distributions – $4.15bn total buyback from 2021 surplus cash flow |
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• Continued strategic momentum – seven major projects; accelerated EV strategy; growing offshore wind portfolio |
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2021 shows bp doing what we said we would – performing while transforming. We've strengthened the balance sheet and grown returns. We're delivering distributions to shareholders with $4.15 billion of buybacks announced and the dividend increased. And we're investing for the future. We've made strong progress in our transformation to an integrated energy company: focusing and high grading our hydrocarbons business, growing in convenience and mobility and building with discipline a low carbon energy business – now with over 5GW in offshore wind projects – and significant opportunities in hydrogen. |
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Bernard Looney Chief executive officer |
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(a) Prior to 2021 adjusting items were reported under two different headings – non-operating items and fair value accounting effects*. See page 29 for more information.
(b) Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.
(c) See Note 9 for more information.
RC profit (loss), underlying RC profit (loss), net debt, ROACE and adjusted EBIDA are non-GAAP measures. Inventory holding (gains) losses and adjusting items are non-GAAP adjustments.
* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 35 .
Top of page 2
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Highlights |
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Underlying results and cash flow |
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• Underlying replacement cost profit* for the quarter was $4.1 billion, compared with $3.3 billion for the previous quarter. This result was driven by higher oil and gas realizations, higher upstream* production volumes and stronger refining commercial optimization, partly offset by a significantly lower oil trading result and an average contribution from gas marketing and trading and the impact of higher energy costs. • Reported profit for the quarter was $2.3 billion, compared with a loss of $2.5 billion for the third quarter 2021. The reported result includes adjusting items* before tax of $3.0 billion with net impairments of $1.1 billion and adverse fair value accounting effects* of $0.9 billion primarily due to further increases in forward gas prices compared to the third quarter. • Operating cash flow* of $6.1 billion includes a working capital* build of $2.2 billion (after adjusting for inventory holding gains* and fair value accounting effects). • bp received $7.6 billion of divestment and other proceeds in the full year including $2.3 billion during the fourth quarter. bp expects to receive proceeds of $2-3 billion in 2022. • For full year 2021 ROACE* was 13.3%. |
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Building a track-record of delivery against our disciplined financial frame |
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• For the fourth quarter bp has announced a dividend of 5.46 cents per ordinary share payable in March 2022. • Net debt* fell to $30.6 billion at the end of the fourth quarter – a reduction of $8.3 billion compared to fourth quarter 2020. • Capital expenditure* in the fourth quarter and full year was $3.6 billion and $12.8 billion respectively. bp now expects capital expenditure of $14-15 billion in 2022 and continues to expect a range of $14-16 billion per annum through 2025. • During 2021 bp generated surplus cash flow* of $6.3 billion. • Share buybacks of $1.725 billion were executed during the fourth quarter including $1.25 billion announced with third quarter results and $475 million to complete the buybacks announced with second quarter results. • bp intends to execute a further $1.5 billion share buyback from 2021 surplus cash flow prior to announcing its first quarter 2022 results. • For 2022, and subject to maintaining a strong investment grade credit rating, bp is committed to using 60% of surplus cash flow for share buybacks and intends to allocate the remaining 40% to strengthen the balance sheet. • On average, based on bp's current forecasts, at around $60 per barrel Brent and subject to the board's discretion each quarter, bp expects to be able to deliver share buybacks of around $4.0 billion per annum and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025. • In addition, to date in 2022, bp has executed a share buyback of $500 million to offset the expected full year dilution from the vesting of awards under employee share schemes in 2022. • The board will take into account factors including the cumulative level of and outlook for surplus cash flow*, the cash balance point* and the maintenance of a strong investment grade credit rating in setting the dividend per ordinary share and the buyback each quarter.
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Investing for the future – transforming to an Integrated Energy Company |
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• In a separate announcement , bp has today provided an update on the significant progress made in executing its transformation to an IEC since outlining its new strategy. Since announcing third quarter results: – In resilient and focused hydrocarbons bp announced the start-up of Platina, offshore Angola – the seventh major project* start-up during the year. In addition, bp has taken further steps to drive portfolio competitiveness supporting the proposed acquisition of Lundin Energy's oil and gas business by Aker BP. – In convenience and mobility, bp acquired EV fleet charging provider AMPLY Power in the US, and in the UK, bp and Marks & Spencer agreed to extend their convenience partnership until at least 2030. – In low carbon bp has continued to advance its offshore wind strategy with the award of a lease option with 2.9GW gross potential in the Scotwind auction and finalizing offtake terms for the Empire Wind 2 and Beacon Wind 1 projects offshore New York. In addition, bp has announced plans for a new large-scale green hydrogen production facility in the UK – HyGreen Teeside – and formed a strategic partnership with Oman to progress an integrated project to deliver world-class scale renewable energy and green hydrogen. |
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During 2021 we established a track-record of delivery against our financial frame with four quarters of strong underlying financial performance. We raised our dividend, substantially reduced net debt, invested with discipline, announced $4.15 billion of share buybacks and drove returns to 13.3%. Looking ahead, our priorities for capital allocation are unchanged and we remain committed to the continued execution of this plan. |
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Murray Auchincloss Chief financial officer |