BP Focuses on “Underlying Profits” Despite $5bn Green Loss

BP sought to reassure the market this week, emphasizing that a projected $5 billion writedown on green energy assets would not impact its underlying profits. The company described the impairments as non-cash items related to the revaluation of its transition businesses, specifically within the gas and low-carbon sectors.
This accounting distinction allows the company to clean up its balance sheet without damaging its core earnings metrics. The writedowns are part of a strategic shift away from renewables, evidenced by the cancellation of hydrogen projects in multiple countries. The firm is pivoting back to fossil fuels under new leadership.
However, underlying profits may still face pressure from other sources. The company warned that its oil trading division had a weak fourth quarter, and that average oil prices had dropped significantly. These operational factors are likely to weigh on the cash earnings reported in February.
On the positive side, the company highlighted its debt reduction efforts. Net debt was lowered to a range of $22 billion to $23 billion, a sign of fiscal discipline. This reduction strengthens the company’s financial position ahead of the arrival of new CEO Meg O’Neill.
The update comes amid broader industry turbulence. With Shell and Exxon cancelling asset sales due to changing market conditions, this British giant is not alone in reassessing its position. The focus on underlying profits serves to remind investors that despite the strategic pivots and paper losses, the core money-making engine remains intact.