BP's bumper earnings stoke new calls for windfall tax - Financial Times

BP recorded its highest quarterly earnings in more than a decade, prompting renewed calls for higher taxes on oil and gas companies to offset soaring energy costs for consumers.

The UK-listed oil major’s underlying profit on a replacement cost basis, the measure most closely tracked by analysts, rose to $6.2bn in the first three months of the year, the highest since 2008 and more than double the $2.63bn recorded a year earlier.

The bumper profits, from soaring prices for hydrocarbons and “exceptional” oil and gas trading revenues even as BP wrote down the value of its business in Russia to zero, came on the back of the company’s highest full-year earnings in eight years.

Sir Keir Starmer, leader of the UK opposition Labour party, said BP’s earnings reinforced the case for a windfall tax on oil and gas profits from the UK North Sea, as Ed Miliband, Labour’s shadow climate change and net zero secretary, criticised the government for “refusing to act”.

BP chief executive Bernard Looney told the Financial Times he understood that many households were “really, really struggling” and that BP’s role was to return cash to shareholders including millions of UK pensioners, pay its taxes and invest in the UK energy system.

A spokesperson for Prime Minister Boris Johnson said that while a windfall tax was not being ruled out, it might deter companies from investing in the North Sea and put jobs at risk. “Each [energy] company will have to justify its approach,” the person said. “It’s about getting the right balance.” 

BP said it intended to invest up to £18bn in Britain’s energy system by the end of 2030 and expected to pay up to £1bn in taxes on its North Sea oil and gas profits this year. BP declined to disclose what percentage of the $6.2bn in quarterly profits was generated in the UK.

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Looney said the redirection of global energy flows following Russia’s invasion of Ukraine had resulted in “the most volatile period in probably energy markets history”, adding that the volatility underlined the need for integrated energy companies such as BP.

“Our first job is to make sure that we connect the supplier of products to the demand for products and in this quarter that role has never been needed more by the world,” he said.

BP’s quarterly profits far exceeded average analyst estimates of $4.49bn and was up from $4.07bn in the final three months of 2021. Its shares were up slightly more than 2 per cent in late-morning trading on Tuesday.

The performance came despite the company’s decision in February to divest its 19.75 per cent stake in Russian oil producer Rosneft following the invasion of Ukraine, which resulted in a pre-tax charge of $24bn and a paper loss for the quarter of $20.4bn — the highest quarterly loss in BP’s history.

BP still holds the stake for which there are few potential buyers given the decision by most international energy companies to distance themselves from Russia. It declined to comment on how and when it expected to divest the shareholding.

The writedown weighed slightly on the oil major’s underlying earnings — in the final quarter of 2021 Rosneft added $745mn to BP’s adjusted profits — but was more than compensated for by the impact of high commodity prices and the performance of other divisions.

“It’s not just the trading business, it is right across the company, the business is running well,” Looney said, adding that BP’s convenience retail division had its best first quarter on record.

Looney added that the decision to withdraw from Russia had not altered BP’s strategy, financial framework or expectations for shareholder distributions.

The company maintained its dividend and expanded its buyback programme to reach $2.5bn in the second quarter of 2022 after completing buybacks of $1.6bn in the first three months of the year. Net debt declined for the seventh consecutive quarter to $27.5bn, down from $30.6bn three months earlier after falling from $38.9bn at the end of 2020.

While the stake in Russia’s state-backed oil producer was once at the heart of BP’s long-term strategy, even before the war some investors felt it had become increasingly incompatible with the group’s plans. Looney has outlined one of the most comprehensive corporate overhauls in the sector, pledging to cut oil and gas production by 40 per cent by 2030 while increasing spending on renewable power generation 20-fold.

“BP ex-Russia is a lower risk investment and the rest of the businesses are performing well,” said Oswald Clint, analyst at Bernstein. “Across the divisions it’s all about higher volumes, price capture, refining margins, and exceptional trading contribution.”

Additional reporting by Jim Pickard

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2022-05-03 10:55:17Z
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Citi acknowledges trading error after flash fall in some European shares - Financial Times

Citigroup acknowledged an error by one of its traders on Monday hours after some European stocks were hit by a short, sudden tumble.

Nordic stocks were particularly hard hit, with Sweden’s benchmark OMX 30 tumbling as much as 7.9 per cent before recovering to close 1.9 per cent lower. Overall, the regional Europe Stoxx 600 index slid as much as 3 per cent before trimming its losses to trade down 1.5 per cent.

Market participants attributed the steep drops to the US banking group bungling a trade of a basket of shares that included many Swedish names. Citi later confirmed that one of its traders had “made an error when inputting a transaction”, without providing further details.

“Within minutes, we identified the error and corrected it,” the bank said in a statement.

For Citi, the trading mishap will invoke memories of its blunder in 2020 when it erroneously transferred $900mn to creditors of the cosmetics company Revlon.

The bank was only able to recoup a portion of the funds. It was also later fined $400mn by US regulators for failing to correct deficiencies in its risk and control systems, and ordered to upgrade its processes and its technology.

Jane Fraser, Citi’s chief executive since February 2021, has stressed that risk and controls remain a priority for the bank, referring to them as “non-negotiables” at an investor event in March.

So-called flash crashes, which refer to brief price collapses, have become more severe with the proliferation of high-frequency trading firms. The term was coined in May 2010 when US stock indices plunged at a dizzying speed.

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2022-05-03 01:35:32Z
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BP slumps to $20.4bn loss as it books cost of Russia exit but oil and gas profits soar - Sky News

BP has reported a loss of $20.4bn (£16.3bn) for the first quarter of the year but faced a renewed backlash over gushing profits from its oil and gas operations.

The company reported a net profit of $6.25bn for the January-March period - its highest in over a decade - thanks to strong oil and gas prices that had already proved lucrative before Vladimir Putin's invasion of Ukraine.

BP's bottom line loss was driven by a $24bn non-cash writedown of its 19.75% stake in oil giant Rosneft and two other joint ventures following the company's decision to exit Russia in February.

However, the underlying profit figure prompted further demands of the government to introduce a windfall tax on energy profits - so far rejected by ministers on the grounds such a move would harm investment in the country's greener future.

British-based BP said it was making a greater commitment to domestic energy security through a £18bn investment over the next eight years, which would include money for North Sea oil and gas - operations that would generate £1bn in taxes for the UK Treasury this year alone.

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But it said that investment would also include commitments to drive down operational emissions as part of its transition to battle climate change under its integrated energy company (IEC) net zero ambition.

The investment would include cash for more wind power and electric car charging points, the company said.

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Chief executive Bernard Looney said: "We're backing Britain".

He told investors: "In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP's focus has been on supplying the reliable energy our customers need.

"Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today.

"But it has not changed our strategy, our financial frame, or our expectations for shareholder distributions.

"Importantly BP continues to perform and step-by-step we are making progress executing our IEC strategy - producing resilient hydrocarbons to provide energy security while investing with discipline in the energy transition."

BP is keen to promote its role in driving energy security as the industry continues to face demands from opposition parties in Westminster for a windfall tax.

BP's underlying earnings have been boosted by natural gas costs hitting record levels.

It has also benefited from the highest oil prices for 14 years though values for both have fluctuated wildly since Russian tanks first rolled in to Ukraine at the end of February.

Its net profit figure of $6.25bn compared to the $4.1bn achieved in the previous quarter.

The company said it would reward shareholders by maintaining its dividend at 5.46 cents per share and boost its share buyback programme to $1.5bn a quarter.

The stock - 20% up in the year to date - rose by more than 3% at the open.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said of the update: "The company has been raking in cash as the supply squeeze on oil markets has intensified.

"The war and the high geopolitical tensions has brought about a surge in the oil price which is up 40% since the start of the year, spiking in the first weeks of the war at $139.

With growing expectation that the European Union will slap a ban on Russian crude exports at the end of the year the price is set to stay elevated, which will help BP recoup the cost of its expensive exit.

"The further $2.5 billion share buy-back announced underlines the company's confidence that the direction of travel will be accompanied by higher crude prices given more of the world is set to shun Russian oil.

"Although there will be inevitably be questions raised about whether more revenues should be used to accelerate BP's ongoing green transition rather than boosting shareholder returns."

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2022-05-03 09:00:00Z
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Apple Pay is anticompetitive, says EU in preliminary ruling - The Verge

Apple has been hit with an antitrust accusation by the European Union over its exclusion of rivals from its Apple Pay mobile payment system. The EU sent Apple a formal “Statement of Objections” with the preliminary view that Apple has abused its dominant position in mobile wallets on iOS.

“The Commission takes issue with the decision by Apple to prevent mobile wallets app developers, from accessing the necessary hardware and software (‘NFC input’) on its devices, to the benefit of its own solution, Apple Pay,” reads the decision. “Today’s Statement of Objections takes issue only with the access to NFC input by third-party developers of mobile wallets for payments in stores.”

According to the EU, Apple’s exclusionary behavior “leads to less innovation and less choice for consumers for mobile wallets on iPhones.”

This is only the initial formal stage of antitrust proceedings against Apple, and the company will have the chance to respond to the Commission’s list of objections. The EU notes that the sending of a Statement of Objections “does not prejudge the outcome of an investigation.”

Today’s ruling follows accusations last year that the company unfairly penalizes rival music streaming services. The EU has the ability to levy fines up to 10 percent of Apple’s global revenue ($36 billion) as well as force changes to the company’s business practices. In practice, though, any fines upheld against Apple’s likely appeal to the charges will be much smaller.

The Commission’s preliminary view against Apple once again shows the EU is leading the way in attempts to rein in the power of Big Tech. In past weeks, the bloc has passed two major legislative acts intended to counter the negative effects of digital behemoths. These are the Digital Services Act (DSA), which forces companies to take tighter control of harmful content on their platforms, and the Digital Markets Act (DMA), which is intended to level the business playing field, allowing smaller companies to compete with the largest corporations.

Apple has objected to a number of provisions outlined by the EU, particularly those that loosen the company’s grip over the App Store (from which Apple collects significant revenue).

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2022-05-02 11:02:07Z
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Qantas Sydney to London route will become world's longest direct flight at 20 hours - Sky News

Travellers will be able to fly non-stop from Sydney to London after Qantas announced the world's longest direct commercial flight.

The airline said the 20-hour journey will become possible when it takes delivery of a dozen Airbus A350-1000 planes, which can do more than 10,000 miles without refuelling.

A Sydney to New York route is also being set up and the new-generation jets open up the potential for direct flights from Australia to any city in the world.

The services start in late 2025 and will carry up to 238 passengers across four travel classes.

For those wanting to stretch their legs on the mammoth flight, there will be a "wellbeing zone" in the centre of the aircraft that includes a snack bar and screens showing movement and stretching exercises.

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It's important to move around on a long flight as being less active can cause cause pain, stiffness and swelling in the legs, increasing the risk of developing a blood clot known as deep vein thrombosis.

The jet is also being designed to offer passengers more room, but 40% of the seats will be in expensive premium cabins.

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Image: The planes will have a 'wellbeing zone' with snacks and stretching tutorials. Pic: Qantas

Qantas says the planes also have 25% less CO2 emissions per seat and less noise, and it claims the long-distance project - which it calls "Project Sunrise" - will be carbon neutral for day one.

The Australian carrier began a 17-hour non-stop flight between London and Perth in 2018, using Boeing Dreamliner jets.

The world's longest route is currently a New York JFK to Singapore route, operated by Singapore Airlines, which takes 18h hours 50 minutes and travels just over 9,500 miles.

Qantas also said it is buying 40 new aircraft for its domestic routes - 20 Airbus A321XLRs and 20 A220-300s - as it retires older Boeing planes.

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2022-05-02 07:32:42Z
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Asda boss Lord Rose warns food prices will rise even HIGHER and stay high 'for quite some time' - Daily Mail

Asda boss Lord Rose warns food prices will rise even HIGHER and stay high 'for quite some time' amid inflation and soaring gas prices - amid a Cabinet row over whether to hit energy firms with a windfall tax on profits made while families suffer

By David Wilcock, Deputy Political Editor For Mailonline

Published: 13:15 BST, 1 May 2022 | Updated: 13:19 BST, 1 May 2022

Families face  food prices that rise even higher than they are now and stay high for some time, the boss of Asda warned today.

Tory peer Lord Rose said that rocketing raw material costs were going to hit a new permanent high level, which would have a knock-on effect in the aisles.

Sunflower oil, wheat and oil prices have been affected by the war in Ukraine, while gas prices were already going skywards before the conflict began in February. 

This week it was revealed the price of groceries in Britain is now increasing at its fastest rate in 11 years, adding an extra £271 to the amount average households will pay at the till this year.

Data from market researcher Kantar showed that overall grocery price inflation hit 5.9 per cent this month in what is the fastest rise since December 2011 as the number of items on promotion at supermarkets decreased.

Prices are rising fastest in products such as dog and cat food, fresh lamb and beef, savoury snacks and crisps but they are falling in spirits - as surging prices cause the biggest squeeze on UK household incomes since the 1950s. Other products rising most rapidly include frozen potato-based products, canned colas, fresh poultry and milk.

Talking to the BBC today, Lord Rose was asked if 5.9 per cent was the ceiling of price rises. He replied: 'They are going to go higher and they are going to stay high for quite some time, I fear.' 

It came amid the appearance of a Cabinet rift over whether to target oil and gas firms for a windfall tax on profits made while prices are high and consumers suffer.

Labour is pressing for the move, and last week Chancellor Rishi Sunak said he could 'look again' at a new levy as a way to help bring prices down. 

But Business Secretary Kwasi Kwarteng said a new tax would be a 'disincentive' to investment.

Mr Kwarteng did not rule out the move being considered by the Government as a measure to alleviate the cost-of-living crisis. But he told Sky's Sophy Ridge on Sunday: 'I've never been a supporter of windfall taxes - I've been very clear about that publicly. I think they discourage investment.'

And he said on the BBC's Sunday Morning show that 'it doesn't make much sense to me to then hit them (energy firms) with a windfall tax which is arbitrary and unexpected'.

'I don't think that is the right way, but I would say that is not for me. That is for the Chancellor of the Exchequer,' he said.

Mr Kwarteng was instead trying to pressure North Sea oil and gas firms to reinvest their profits so more drastic action is not required.

He has written to the industry demanding a 'very clear plan' to spend profits on accelerating domestic production and clean energy before a meeting in the coming weeks.

Mr Kwarteng told the sector that investing in home-grown energy production is essential to grow the British economy and 'crucially bring down consumer bills in the long term'.

Labour said the Government is 'rattled' because oil and gas producers are making 'soaring profits' while bills rocket.

Meanwhile there were warnings today that cheap chicken may soon be a thing of the past - with the price of poultry set to skyrocket in the coming months.

Marks & Spencer is already retailing organic chicken breasts and organic beef rump steak at £24.15 per kilogram.

The price of chicken is rising faster than any other protein because of feeding costs, rising energy prices and wages rise.

The UK's largest chicken supplier 2 Sisters said price inflation of 15 per cent will be needed 'to even begin to cover the increasing cost of production' of the poultry.

The Office of National Statistics recorded a 19 per cent rise in the price of chicken between March 2020 and March 2022.

Chicken feed is made using soya, a by-product of sunflower oil which has seen massive price rises due to the war between Russia and Ukraine.

Russia and Ukraine produce a third of the world's grain - which is used to produce cooking oil - and both are experiencing particularly poor harvests due to the Russian invasion which began on February 24.

Supermarkets are even imposing limits on how much cooking oil customers can buy due to supplies being hit by the war in Ukraine.  

Lord Rose told the BBC Sunday Morning show: 'We don't know what will happen to gas prices and whatever else and clearly that will be dictated by however long this war goes on for, but I am afraid there is knock-on effect for all raw materials.

'There is going to be a new level of costs for these raw materials and they won't go down. It is a new high and that is something that people are going to have to accommodate.

'What we are now going to have to think about is, is that going to have a long-term effect on inflation because then will we have a wage spiral, or won't we?

'The converse side of that is we could end up, if we have no growth in the business, having stagflation.

'They are both evil and the Government has got a very difficult and tricky road to navigate.'

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2022-05-01 12:15:06Z
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Bill Gates calls for global surveillance team to spot pandemic threats - Financial Times

A team of international experts ranging from epidemiologists to computer modellers should be created to quickly identify global health threats and improve co-ordination between countries, Bill Gates has said, warning that greater investment is needed to avoid another pandemic.

The Microsoft founder and philanthropist, who in 2015 first cautioned publicly that the world was not ready for the inevitable next pandemic, said his proposed Global Epidemic Response and Mobilization initiative should be managed by the World Health Organization.

As the war in Ukraine dominates the international agenda, Gates urged global leaders not to lose sight of the health crisis. He called for greater investment to prevent future pandemics. “It seems wild to me that we could fail to look at this tragedy and not, on behalf of the citizens of the world, make these investments,” Gates told the Financial Times.

More than 6.2mn worldwide are estimated to have died from Covid-19 since late January 2020, shortly before the WHO declared the outbreak a Public Health Emergency of International Concern.

He acknowledged there were questions over whether an international consensus could be reached to increase funding for WHO, which he believed was the only body that could build and manage the “top-notch” GERM team for which the running costs, he estimated, would be around $1bn a year.

“The amount of money involved is very small compared to the benefit and it will be a test: can global institutions take on new responsibilities in an excellent way, even in a time period where US-China [relations are] tough, US-Russia is extremely tough?” said Gates

Bill Gates © POOL/AFP via Getty Images

The WHO had “less than 10 full-time people” working on outbreak preparedness, said Gates, adding that “even those people are distracted with many other activities”.

“The current WHO funding is not at all serious about pandemics,” he said.

Gates, who argued that there was an urgent need for longer-lasting vaccines that blocked infection, stressed that the current pandemic still posed a threat.

“We’re still at risk of this pandemic generating a variant that would be even more transmissive and even more fatal,” he said. “It’s not likely, I don’t want to be a voice of doom and gloom, but it’s way above a 5 per cent risk that this pandemic, we haven’t even seen the worst of it.”

Gates, whose book How to Prevent the Next Pandemic is published on Tuesday, expressed his hope that the UK would not further reduce its contribution to foreign aid funding, suggesting this could lead to other nations engaging in their own retrenchment which could jeopardise key global public health programmes.

The UK’s decision last year to reduce its annual aid budget from 0.7 per cent, to 0.5 per cent, of gross national income was “a disappointment”. It meant areas such as polio and reproductive health had been cut.

“We’re down to the bare minimum, and if the UK cuts more, then others will do as well,” said Gates. “That would be tragic because . . . all that money saves lives for less than $1,000 per life saved.”

He said the UK remained a big donor to the vaccine alliance Gavi and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

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2022-05-01 04:04:54Z
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