Tuesday, May 11, 1999 Published at 12:41 GMT 13:41 UK
Business: The Company File
BP profits tumble
BP hopes its merger will be able to pump life into its profits
BP Amoco, the oil giant and the UK's largest company by market capitalisation, has announced a slump in profits.
The group's underlying profits fell 47% in the the first three months of the 1999 to $677m.
Its earnings have been hit by difficult trading in the oil market and the costs associated with merging the BP and Amoco oil empires.
But stripping out the costs of the $55bn merger, profits fell by 41% to $761m, higher than expected by the City.
Chief Executive John Browne said it was a good debut result for the new company in a tough environment, helped by performance improvements from lower cash costs and higher volumes in all businesses and as the benefits of BP's merger with Amoco start to come through.
"Whichever way you look at it these figures are top of the range and a sound performance in the circumstances," said analyst Peter Hitchens at Williams de Broe.
Better oil prices
The group also predicted that the recent increase in global oil prices would persist as long as the Organisation of Petroleum Exporting Countries (OPEC) respected commitments to slash output.
The company's share price was virtually unchanged at £11.39 shortly following the results.
BPAmoco was created on December 31 from the merger of British Petroleum and Amoco of the United States, overtaking Royal Dutch Shell to become the largest European oil company. When it completes the acquisition of another US oil company, Atlantic Richfield, it will become the world's largest private oil producer.
The slump in oil prices has been behind the merger wave. Other oil companies' profits have also been hit, with profits falling at rivals Exxon by 40% and Shell by 26% in this quarter.
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