BP p.l.c. (BP) Bundle
Understanding BP p.l.c. (BP) Revenue Streams
Understanding BP p.l.c.’s Revenue Streams
The primary revenue sources for BP p.l.c. include the following segments:
- Oil Production & Operations: Generated significant revenue through the extraction and sale of crude oil.
- Gas & Low Carbon Energy: Focused on natural gas production and emerging renewable energy sources.
- Customers & Products: Revenue from refined products and retail sales.
Revenue Breakdown by Segment
| Segment | Q3 2024 Revenue ($ million) | Q3 2023 Revenue ($ million) | Year-over-Year Growth (%) |
|---|---|---|---|
| Oil Production & Operations | 1,891 | 3,427 | -44.8% |
| Gas & Low Carbon Energy | 1,007 | 2,275 | -55.8% |
| Customers & Products | 23 | 1,549 | -98.5% |
| Other Businesses & Corporate | 653 | (500) | +230.6% |
| Total Revenue | 3,639 | 6,694 | -45.3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates for the first nine months of 2024 compared to 2023 are as follows:
| Period | Revenue ($ million) | Previous Year Revenue ($ million) | Growth Rate (%) |
|---|---|---|---|
| Q1-Q3 2024 | 11,021 | 25,011 | -56.0% |
Significant Changes in Revenue Streams
Significant changes in revenue streams for BP p.l.c. as of Q3 2024 include:
- Decline in oil production revenue due to lower market prices and production levels.
- Gas and low carbon energy revenues decreased sharply, reflecting lower realizations and market dynamics.
- Customers & Products segment showed a drastic drop in revenue primarily due to weak refining margins.
- Other Businesses & Corporate segment reported a rebound from a loss in the same quarter of the previous year, contributing positively to total revenue.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to overall revenue for the third quarter of 2024 is broken down as follows:
| Segment | Contribution to Total Revenue (%) |
|---|---|
| Oil Production & Operations | 52.0% |
| Gas & Low Carbon Energy | 27.7% |
| Customers & Products | 0.6% |
| Other Businesses & Corporate | 17.9% |
Overall, the company experienced a significant decline in revenue across most segments compared to the previous year, driven by market fluctuations and operational challenges in oil and gas production.
A Deep Dive into BP p.l.c. (BP) Profitability
Profitability Metrics
In examining the profitability metrics of the company, we focus on key figures including gross profit, operating profit, and net profit margins, alongside trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
The following table summarizes the gross profit, operating profit, and net profit figures for the third quarter and nine months of 2024 compared to the same periods in 2023:
| Metric | Q3 2024 ($ million) | Q3 2023 ($ million) | 9M 2024 ($ million) | 9M 2023 ($ million) |
|---|---|---|---|---|
| Gross Profit | 3,639 | 6,694 | 11,021 | 25,011 |
| Operating Profit | 2,457 | 8,287 | 10,554 | 25,272 |
| Net Profit | 206 | 4,858 | 2,340 | 14,868 |
The gross profit margin for Q3 2024 was approximately 8.1%, down from 12.3% in Q3 2023. The operating profit margin decreased from 15.3% in Q3 2023 to 5.2% in Q3 2024. The net profit margin also showed a significant decline, falling from 9.0% in Q3 2023 to 0.4% in Q3 2024.
Trends in Profitability Over Time
The following trends in profitability are observed:
- Gross profit decreased from $6.7 billion in Q3 2023 to $3.6 billion in Q3 2024.
- Operating profit saw a decline from $8.3 billion in Q3 2023 to $2.5 billion in Q3 2024.
- Net profit attributable to shareholders dropped from $4.9 billion in Q3 2023 to $0.2 billion in Q3 2024.
Comparison of Profitability Ratios with Industry Averages
The following table compares the profitability ratios of the company with industry averages:
| Ratio | Company Q3 2024 | Industry Average Q3 2024 |
|---|---|---|
| Gross Profit Margin | 8.1% | 12.0% |
| Operating Profit Margin | 5.2% | 10.5% |
| Net Profit Margin | 0.4% | 7.0% |
Analysis of Operational Efficiency
Operational efficiency is crucial for understanding profitability. Key insights include:
- Cost management has been a challenge, with operating cash flow decreasing to $6.8 billion in Q3 2024 from $8.7 billion in Q3 2023.
- Gross margin trends show a decline, reflecting pressures from market conditions and increased costs.
- Adjusted EBITDA for Q3 2024 was $2.9 billion, compared to $2.8 billion in Q3 2023, indicating some resilience in core operations despite declining profits.
In summary, the profitability metrics reveal significant challenges faced by the company in 2024, with declining margins and profits compared to both previous periods and industry averages.
Debt vs. Equity: How BP p.l.c. (BP) Finances Its Growth
Debt vs. Equity: How BP p.l.c. Finances Its Growth
Finance debt at the end of the third quarter 2024 was $57.5 billion, compared with $52.0 billion at the end of the fourth quarter 2023 and $48.8 billion at the end of the third quarter 2023. At the end of the third quarter, net debt was $24.3 billion, compared with $20.9 billion at the end of the fourth quarter 2023 and $22.3 billion at the end of the third quarter 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was 23.3%, indicating a balanced approach to financing. This compares to 19.7% at the end of December 2023 and 20.3% at the end of September 2023.
Recent Debt Issuances and Credit Ratings
In the first quarter of 2024, the company issued $1.3 billion of US dollar perpetual subordinated hybrid bonds with a coupon fixed at 6.45% for an initial period up to 2034.
Balancing Debt Financing and Equity Funding
The company maintains a strategic focus on balancing its debt financing with equity funding. Total equity was $79.9 billion as of September 30, 2024, down from $85.5 billion at the end of December 2023.
| Financial Metric | September 30, 2024 | December 31, 2023 | September 30, 2023 |
|---|---|---|---|
| Finance Debt | $57.5 billion | $52.0 billion | $48.8 billion |
| Net Debt | $24.3 billion | $20.9 billion | $22.3 billion |
| Total Equity | $79.9 billion | $85.5 billion | $87.7 billion |
| Debt-to-Equity Ratio | 23.3% | 19.7% | 20.3% |
In addition, the company continues to execute share buybacks, with a commitment of $1.75 billion for the fourth quarter of 2024, reflecting its disciplined financial strategy.
Assessing BP p.l.c. (BP) Liquidity
Assessing BP p.l.c.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.25 (current assets of $48.97 billion and current liabilities of $39.09 billion).
Quick Ratio: The quick ratio stands at 0.82 (quick assets of $36.09 billion and current liabilities of $39.09 billion).
Analysis of Working Capital Trends
The working capital has shown a positive trend with a total working capital of approximately $9.88 billion as of September 30, 2024, compared to $8.72 billion at the end of 2023.
| Period | Current Assets ($ billion) | Current Liabilities ($ billion) | Working Capital ($ billion) |
|---|---|---|---|
| Q3 2024 | 48.97 | 39.09 | 9.88 |
| Q4 2023 | 45.76 | 37.04 | 8.72 |
Cash Flow Statements Overview
The cash flow from operating activities for Q3 2024 is $6.76 billion, a decrease from $8.75 billion in Q3 2023. The investing cash flow shows an outflow of $4.23 billion for Q3 2024, while financing activities resulted in a net cash outflow of $3.00 billion.
| Cash Flow Type | Q3 2024 ($ billion) | Q3 2023 ($ billion) |
|---|---|---|
| Operating Cash Flow | 6.76 | 8.75 |
| Investing Cash Flow | (4.23) | (3.46) |
| Financing Cash Flow | (3.00) | (4.18) |
Potential Liquidity Concerns or Strengths
Despite a healthy current ratio, the quick ratio below 1 suggests potential liquidity concerns in meeting short-term obligations. Operating cash flows have decreased year-over-year, indicating a need for careful cash management.
Finance Debt: As of September 30, 2024, total finance debt amounts to $57.47 billion, an increase from $48.81 billion in Q3 2023. Net debt stands at $24.27 billion, compared to $22.32 billion a year earlier.
| Debt Metric | Q3 2024 ($ billion) | Q3 2023 ($ billion) |
|---|---|---|
| Finance Debt | 57.47 | 48.81 |
| Net Debt | 24.27 | 22.32 |
Is BP p.l.c. (BP) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of BP p.l.c. (BP) focuses on several key financial metrics that help determine whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
As of 2024, BP's P/E ratio stands at 9.34. This is calculated based on a current stock price of $11.76 and earnings per share (EPS) of $1.26 for the third quarter of 2024.
Price-to-Book (P/B) Ratio
BP's price-to-book ratio is 1.32, reflecting a market capitalization of approximately $192 billion against a book value of equity of $145 billion.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA ratio for BP is currently 6.96, calculated using an enterprise value of $206 billion and an EBITDA of $29.6 billion.
Stock Price Trends
Over the last 12 months, BP's stock price has experienced fluctuations, starting at approximately $14.50 in October 2023 and declining to $11.76 by October 2024, representing a decrease of about 18.9%.
Dividend Yield and Payout Ratios
BP has announced a dividend of $0.08 per share for the third quarter of 2024, which translates to a dividend yield of approximately 2.7%, based on the current stock price. The payout ratio stands at 20.1%, indicating a relatively conservative approach to dividend distribution compared to earnings.
Analyst Consensus on Stock Valuation
Currently, the analyst consensus for BP is a Hold, with a majority suggesting caution due to the recent decline in stock price and mixed performance in financial results.
| Metric | Value |
|---|---|
| P/E Ratio | 9.34 |
| P/B Ratio | 1.32 |
| EV/EBITDA Ratio | 6.96 |
| Current Stock Price | $11.76 |
| Dividend per Share | $0.08 |
| Dividend Yield | 2.7% |
| Payout Ratio | 20.1% |
| Analyst Consensus | Hold |
Key Risks Facing BP p.l.c. (BP)
Key Risks Facing BP p.l.c.
BP p.l.c. faces several internal and external risks that may impact its financial health as of 2024. These risks include competitive pressures, regulatory changes, and fluctuating market conditions.
Industry Competition
The oil and gas industry is characterized by intense competition, particularly from both traditional and emerging energy companies. The average realized price for liquids was $70.68 per barrel in Q3 2024, a slight decrease from $71.85 per barrel in Q3 2023. This drop may affect profit margins and market share.
Regulatory Changes
Regulatory risks are significant, especially with the introduction of the UK Energy Profits Levy, which increased the tax rate to 75% on taxable profits from BP's North Sea operations. Recent announcements have indicated a further 3% increase in the rate and an extension of the levy until March 2030.
Market Conditions
Market volatility poses a risk to BP's operations, with the replacement cost (RC) profit before interest and tax for Q3 2024 reported at $1.1 billion, down from $3.6 billion in Q3 2023. This decline is attributed to weaker realized refining margins and lower oil trading contributions.
Operational Risks
Operational challenges include managing production costs and maintaining operational efficiency. BP reported a finance debt of $57.5 billion at the end of Q3 2024, an increase from $52.0 billion at the end of Q4 2023. Additionally, net debt rose to $24.3 billion, up from $20.9 billion.
Financial Risks
Financial risks are evident from the adjusted EBITDA of $9.654 billion for the nine months of 2024, which is lower compared to $10.306 billion in the same period of 2023. This reflects the impact of lower revenues, which totaled $143.4 billion for the nine months of 2024, down from $158.0 billion in 2023.
Strategic Risks
Strategic risks involve the company's ability to adapt to changing energy demands and transition towards low-carbon energy sources. The renewables pipeline at the end of Q3 2024 stood at 46.8 GW, a slight increase from 43.9 GW in 2023. However, the transition has also led to increased exploration write-offs, which amounted to $798 million for the nine months of 2024.
Mitigation Strategies
BP has employed several strategies to mitigate these risks, such as maintaining a strong balance sheet and targeting an investment grade credit rating. The company has committed to $14 billion in share buybacks through 2025, contingent on market conditions. Additionally, BP has announced a dividend of 8 cents per share for Q3 2024, reflecting its commitment to shareholder returns.
| Risk Factor | Current Status | Impact |
|---|---|---|
| Industry Competition | Average realized liquid price: $70.68/bbl | Decrease in profit margins |
| Regulatory Changes | UK Energy Profits Levy: 75% tax rate | Increased tax burden |
| Market Conditions | RC profit: $1.1 billion | Lower revenues and profit |
| Operational Risks | Finance debt: $57.5 billion | Increased financial strain |
| Financial Risks | Adjusted EBITDA: $9.654 billion | Reduced cash flow |
| Strategic Risks | Renewables pipeline: 46.8 GW | Increased exploration write-offs: $798 million |
Future Growth Prospects for BP p.l.c. (BP)
Future Growth Prospects for BP p.l.c.
Analysis of Key Growth Drivers
The company's growth is driven by several key factors, including:
- Product Innovations: BP has been focusing on developing advanced sustainable fuels, particularly in collaboration with partners like Audi for Formula 1.
- Market Expansions: BP's renewables pipeline has reached 46.8 GW, with significant contributions from offshore and onshore wind projects.
- Acquisitions: In 2024, BP acquired full ownership of BP Bunge Bioenergia and Lightsource BP, enhancing its position in the biofuels and solar markets.
Future Revenue Growth Projections and Earnings Estimates
BP's revenue growth is projected to continue, driven by strategic investments in renewables and low-carbon technologies. The company's underlying replacement cost profit for the third quarter of 2024 was $2.3 billion, down from $3.3 billion in Q3 2023. For the nine months ending September 2024, it reported an underlying replacement cost profit of $7.7 billion compared to $10.8 billion in the same period of 2023.
Strategic Initiatives or Partnerships Driving Future Growth
Key strategic initiatives include:
- Partnership with Audi for sustainable fuels in the motor racing sector.
- Expansion of EV charging infrastructure, with a reported growth of 20% in installed charge points.
- New agreements in the Caspian Sea for exploration and development, enhancing BP's geographical diversification.
Competitive Advantages Positioning for Growth
BP benefits from several competitive advantages:
- Diverse Portfolio: With operations in oil, gas, and renewables, BP is well-positioned to adapt to changing market demands.
- Strong Financial Position: As of Q3 2024, BP's finance debt stood at $57.5 billion, with a net debt of $24.3 billion.
- Established Brand: BP's longstanding presence in the energy sector provides a robust foundation for future growth initiatives.
Growth Opportunity Table
| Growth Driver | Details | Financial Impact |
|---|---|---|
| Product Innovations | Advanced sustainable fuels development | Potential revenue increase from new product lines |
| Market Expansions | Renewables pipeline growth to 46.8 GW | Long-term revenue growth from renewable energy sales |
| Acquisitions | Full ownership of BP Bunge Bioenergia | Increased market share in biofuels, enhancing revenue |
| Strategic Partnerships | Collaboration with Audi for sustainable fuels | Brand enhancement and market penetration in automotive |
| EV Infrastructure | Expansion of EV charging network | Revenue from increased energy sales (1 TWh sold) |
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Article updated on 8 Nov 2024
Resources:
- BP p.l.c. (BP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BP p.l.c. (BP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View BP p.l.c. (BP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.