BP beats profit expectations after warning of weaker oil refining

British oil giant BP on Tuesday reported stronger-than-expected net profit for the second quarter and raised its dividend despite previously warning of significantly lower refining margins.

The oil and gas major posted underlying replacement cost profit, used as a proxy for net profit, of $2.8 billion for the second quarter. That beat analyst expectations of $2.6 billion, according to an LSEG-compiled consensus.

BP reported net profit of $2.7 billion for the first three months of the year and $2.6 billion for the second quarter of 2023.

The energy firm announced it had increased its dividend by 10% and extended its share repurchasing program to the fourth quarter.

BP said earlier in the month that weak refining margins and lower oil trading results would likely dent the firm’s second-quarter results by as much as $700 million. The firm also predicted a writedown of between $1 billion to $2 billion due to a plan to scale back refinery operations at its Gelsenkirchen plant in Germany.

Shares of the London-listed company are down roughly 2.8% year-to-date.

By comparison, shares of British rival Shell have climbed nearly 8% so far this year, while shares of U.S. oil giant Exxon Mobil have jumped more than 16%.

BP’s second-quarter results come as the company seeks to rebuild investor confidence in its strategy. The firm has come under pressure from activist investor Bluebell Capital Partners to ramp up its oil and gas investments and scale back on green pledges.

Reuters reported in late June that BP CEO Murray Auchincloss had imposed a hiring freeze and paused renewables projects as part of a cost-cutting plan to boost returns. BP said at the time that Auchincloss had introduced six priorities “to deliver as a simpler, more focused and higher value company.”

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