BP plc · LSE:BP.
BP — Q2 2002 Earnings Presentation
28 slides from BP's earnings presentation, Jul 30, 2002
Slide 1: Presentation to the financial community
presentation to the financial community tuesday 30th July 2002
Slide 2: Forward-looking statements
This presentation and the associated slides and discussion contain statements, particularly those regarding capital employed, capital expenditure, cash flows, costs, savings, debt, demand, depreciation, disposals, dividends, earnings, efficiency, gearing, growth, improvements, investments, margins,
Slide 3: John Browne
John Browne
Slide 4: Agenda
agenda l trading environment l financial results l performance update by stream l progress against strategy l q&a
Slide 5: 2002 targets unchanged and on track
2002 targets unchanged l 5.5% production volume growth l $1.4bn mid-cycle RCOP improvement l unit cost reductions …and on track
Slide 6: Strategy unchanged
strategy unchanged l organic investment l high grade portfolio l capital efficiency l operating efficiency 4 increase mid-cycle returns 4 growing capital employed 4 growing dividend …within a disciplined financial framework …and being delivered
Slide 7: Trading environment in 1H
trading environment in 1H 2Q 01 1Q 02 2Q 02 1H 02 1H 01 average realisations 24.74 18.77 22.81 oil $/bbl 20.81 24.77 3.43 2.27 2.45 natural gas $/mcf 2.36 4.21 indicator margins 5.78 1.64 2.06 refining $/bbl 1.85 5.02 105 80 109* chemicals $/te 95* 104 *provisional l below mid-cycle due to weak down
Slide 8: John Buchanan
John Buchanan
Slide 9: Financial results
financial results % change l results for the second quarter vs 2Q 01 4proforma $2.2bn (36%) 4reported $1.3bn (51%) 4net cash from operating activity $5.1bn 1% 4dividend 6.0¢/share 9% 4ROACE (proforma) 14.1% l results for the first half vs 1H 01 4proforma $3.8bn (47%) 4reported $2.2bn (61%) 4net cash
Slide 10: 1H 02 vs 1H 01 variance
1H 02 vs 1H 01 variance proforma basis $bn 8 7 6 $0.4 bn pre-tax $0.3 bn post-tax 5 4 3 2 1 0 1H 01 oil & gas r&m chemicals underlying interest 1H 02 RCP prices margins margins improve- & msi RCP ment
Slide 11: Sources of performance delivery
sources of performance delivery mid-cycle RCOP growth $bn 1.5 portfolio $1.0bn $1.0bn $1.0bn volume 1.0 cost exploration $0.4bn write-off 0.5 0.0 - 0.5 1H 01 1H 02 2H 01 2H 02* *bp target
Slide 12: Special and exceptional items
special and exceptional items $bn pre-tax 2.0 1.0 0 (1.0) (2.0) (3.0) (4.0) 96 97 98 99 00 01 02* *bp estimate
Slide 13: Sources and uses of cash
sources and uses of cash $bn 1H 01 1H 02 14 12 buybacks disposals dividends 10 11.8 acquisitions 8 operations 8.8 6 capex 4 2 tax, interest & msi 0 sources uses sources uses
Slide 14: Financial framework
financial framework gearing* end-2Q 28% (25-35% target band) dividend 6¢/UK share (36¢/ADR) up 0.25¢ vs 1Q 02 : +9% 1H 02 vs 1H 01 (target around 60% of mid-cycle proforma result) buybacks zero in 1H 02, intention to resume in 2H 02 *proforma gearing = net debt / (net debt + equity - acquisition adj
Slide 15: Dick Olver
Dick Olver
Slide 16: Upstream highlights
upstream highlights l production 4 over 5% growth on 2Q 01 4 on track for full year l production costs 4 unit cost reduction 6% versus 1H 01 l margins 4 sustaining today 4 growing tomorrow
Slide 17: Growing volume
growing volume today tomorrow mboed mboed planned new projects 4000 avg.+5.5% 2000 pre-sanction engineering 02 sanctions 1600 under construction 3000 producing 1200 2000 800 1000 400 0 0 2000 2001 2002 2002 2003 2004 2005 2006 new projects base source: bp forecast 2002 - 06
Slide 18: Growing margins
growing margins today tomorrow • sustaining profit margins • improving profit margins • improving cash margins • improving cash margins • improving returns production costs DD&A net income per boe per boe per boe 2001 2002 2001 2002 2002 2006 source: bp forecast 2002 -06
Slide 19: Capital & operating efficiency
capital & operating efficiency operating capital efficiency (%) days efficiency 88 35 30 87 25 86 20 15 85 10 84 5 83 0 00 01 1H 02 00 01 1H 02 availabilty % drilling productivity days/10k ft
Slide 20: John Browne
John Browne
Slide 21: Gas, power & renewables highlights
gas, power & renewables highlights l 1H gas sales up 10% l marketed gas volumes in Spain up 40% l strong solar business growth
Slide 22: Refining & marketing highlights
refining & marketing highlights l margins weak 4 refining down around 60% 1H 02 vs 1H 01 4 retail margins flat l 1H 02 volumes at record levels due to Veba acquisition 4 marketing sales up 6% (- 4% excl Veba) 4 convenience sales up 54% (+10% excl Veba) l costs 4 flat in 1H 02 but full year planned r
Slide 23: Growing retail
growing retail growing volume/site growth through brands sites (excl. Veba) volume per site sites stores sales (mlpa) index 30000 4.20 8000 BP re-imaged BP Sites (excl. Veba) helios sites 130 avg. fuel volume convenience growth 4.00 120 27500 3.80 4000 110 3.60 100 25000 3.40 0 90 00 01 1H 02 99 00
Slide 24: Chemicals highlights
chemicals highlights l 2Q margins up vs 1Q but remain weak l 2Q profit improvement from self-help: 4volumes improved by 4% over 1Q 02 45% lower unit costs l compared to 1H 01 performance improvement due to: 4restructuring benefits impact 426% higher volumes, lower unit costs 45% improvement in relia
Slide 25: 2002 investment
2002 investment 2002 1H 02 plan actual $bn $bn l organic capex 12-13 6.1 l acquisitions 5.7* l disposals (2.9) l net investment 8 -10 8.9 * includes Veba 49% ($2.4bn paid 3Q) and assumed debt ($1.0bn in 1Q)
Slide 26: Veba acquisition & Ruhrgas sale
Veba acquisition & Ruhrgas sale transactional steps to date cash debt $bn $bn 51% ownership (with effect 01 feb) (1.6) (1.0) 49% ownership (with effect 30 june) (2.4) upstream sale 1.5 Ruhrgas sale 2.4 total (0.1) (1.0) • further disposal proceeds still to come • should be cash positive in 2002 • ac
Slide 27: Summary and outlook
summary and outlook l 2002 targets unchanged…. and on track l strategy unchanged… and being delivered l dividend increased l share buy-backs
Slide 28: Q&A session
q&a session John Browne group chief executive John Buchanan chief financial officer Dick Olver chief executive, e&p Byron Grote chief executive, chemicals John Manzoni chief executive, r&m Ralph Alexander chief executive, gp&r Fergus MacLeod investor relations