Hayward orders jobs cull as BP profits dive

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BP profits for 2007 plunged by a fifth to $17.5 billion (£8.8 billion) after a worse-than-expected fourth quarter.

Although it is still making £24 million a day, the earnings dive is enough for chief executive Tony Hayward to order a cull which will cost the company $1.35 billion up to the end of this year.

The 5000 jobs - many of them in the UK - are on top of 9500 forecourt and store workers in the US that BP has removed from the payroll by transferring them to another company.

The main culprit in the profits dive is BP's American refineries operations being out of action including Texas City, where operations have been delayed by safety and operational issues after the 15 deaths in an explosion and fire in 2005.

That sent BP's downstream operations into a $1.1 billion loss for the last quarter of 2007 while group profits came in flat at $4 billion.

That was below most brokers' forecasts and more than 25% less than predictions at the turn of the year before analysts were guided on the quiet to slash their estimates by more than $1 billion.

"Fourth-quarter profits were very disappointing in refining and marketing [forecourt petrol sales] in particular," said Hayward. "The competitive financial performance of refining and marketing was very poor despite the fact that we have a strong set of assets.

"The principal reason is poor reliability in some of our US refineries which is compounded by the complexity and overhead structure of the business segment."

There was some good news for investors. BP is increasing its dividend by 25% after the dollar-denominated payouts began to wither because of the weak greenback. Despite net debt rising $6.1 billion to $27.5 billion, Hayward said BP can afford the increased divi as its shares base has shrunk by around a sixth through stock buybacks.

Hayward signalled production would rise this year and he is sticking to previous forecasts of four million barrels by 2009 and 4.3 million by 2012.

He also signalled a big ramp-up in capital expenditure, up to $22 billion this year from the $19 billion spent in 2007.