BP FY 22 – 07/02 – having seen the record profits Shell made last year, the focus this week now shifts to BP, and the amount of tax the company pays on its profits made here in the UK. Back in August BP set aside an extra $800m in respect of the increase in windfall taxes for this year. In November the oil company recorded $8.15bn of underlying replacement cost profit, along with a pledge to buy back another $2.5bn of shares. While the headline number was impressive in terms of how close it came to matching Q2's strong performance, the actual profits attributable to shareholders was zero due to an accounting adjustment which pushed the company into a quarterly loss of $2.16bn. This adjustment came from its gas and low carbon energy unit which once again outperformed with profits of $6.24bn, however due to the volatility in forward gas markets and a repricing of forward gas prices, this has turned into a loss of $2.96bn. Its oil production and operations division returned $5.21bn in profits. On top of the Rosneft adjustment earlier at the start of the year that means BP has actually recorded a -$13.29bn loss so far year to date. BP has already set aside an $800m adjustment in this quarter's numbers in respect of the latest UK windfall tax, pushing the tax take from the North Sea to $2.5bn for this year. BP is also continuing to pay over $1.2bn a year in respect of the Gulf of Mexico oil spill. One of the other main criticisms levelled at oil companies has been the amount of money spent on renewables, relative to share buybacks which have become highly controversial. On the outlook BP remains committed to using 60% of its surplus cash flow for share buybacks, and the remaining 40% to strengthen the balance sheet. Spending on renewables is something that BP does need to do more of which means last week's announcement that they will dial back their push towards clean energy is unlikely to be well received in political circles. Whatever politicians say you can't change the political reality that the energy backdrop has changed with the recent surge in energy prices. With energy security and high prices now front of mind for ordinary people, the only way to reduce prices is to add extra capacity, which means new LNG resources will be needed. Returns from renewables are well below those of gas, and also aren't reliable enough. Politicians would do well to recognise that a slower transition is needed. In Q3, capex spending on low carbon energy came in at $86m, out of a total of $958m, in its gas and low carbon energy division, down from $142m in Q2, taking the total spend on low carbon this year to $447m, out of a total of $2.64bn. That quite frankly is pitiful so there is scope for that to improve with hydrogen and bio-gas likely to be one area which could see extra investment.
Unilever FY 22 – 09/02 – just over year ago Unilever shares tanked after it was reported that they had made a £50bn bid for GlaxoSmithKline's consumer healthcare business, of which it owned a 68% stake along with Pfizer. The failure of that bid proved to be the last straw for a lot of shareholders, not so much that the bid was made, but that it was even being considered given the other problems Unilever has had to deal with. Fast forward 12 months and CEO Jope is on his way out to be replaced by Hein Schumacher who will take over the reins on 1st July 2023. As we look towards this year's full year numbers it's fortunate for Unilever that GSK didn't rip their arm off, as the shares have performed well since finding a bottom on March last year once it became apparent that Unilever wasn't prepared to make a new offer. When the company reported in Q3 the consumer goods giant reported a 10.6% rise in sales to €15.8bn, with the company raising its sales guidance for the full year. What was particularly encouraging was that the growth in sales came across all of its divisions, although nutrition was by far the weakest, rising by 4.8%, with all the others into the low 20%. The ability of the company to raise prices, which rose 12.5% % did prompt a paring back in volumes to the tune of a 1.6% decline. The company said it now expects full year underlying sales growth to be above 8%.
