BP profits fall 24 per cent

BP plc reported a 24 per cent drop in fourth-quarter net profit to $2.97 billion yesterday, as charges related to selling service stations, weak refining margins and higher costs outweighed the benefit of higher oil prices and a small rise in output.

The third-largest Western major oil company by market capitalisation said in a statement full-year earnings fell 22 per cent to $17.29 billion.

Chief executive officer Tony Hayward described the fourth quarter results as "very disappointing".

Excluding non-operating items which amounted to a net charge of $1.03 billion, the fourth-quarter replacement cost profit, which strips out changes in value of inventories, was $4.002 billion. A Reuters poll of 11 analysts gave an average forecast of $4.455 billion for London-based BP's replacement cost profit, excluding one-off items.

BP said production rose almost two per cent in the quarter compared to the same period in 2006, the first rise after nine quarters of falling output.

The London-based company also said that in future it would have a bias for distributing cash to shareholders via dividends, rather than buybacks. This is in line with the strategy followed by rival Royal Dutch Shell Plc.