BP quarterly profit hits $4.7bn

BP's chief executive Lord Browne cheered the results

Oil giant BP has reported a first quarter profit of $4.72bn (£2.64bn) - a rise of 17% on the same time last year.

Sales for the three months ending 31 March were $67.6bn (£37.8bn), a 9% rise on the first quarter of 2003.

The company also announced it will be selling half its chemicals business to focus on its more profitable areas.

BP, whose figures came in at the top end of market expectations, saw its profits boosted by the £1.177bn sale of stakes in two Chinese oil companies.

Investment aim

By late-afternoon trading in London BP's share price was down 2 pence at 486 pence.

Strong oil demand growth, low inventories, a tight US gasoline market and concern about possible supply disruptions have kept crude prices supported BP boss Lord Browne BP share price

BP chief executive Lord Browne said the company was on track with its targets for investment growth, increasing its dividend, and utilising surplus cash to fund its ongoing "significant" share buybacks.

Looking ahead he said he expected oil and petrol prices to remain at current strong highs until at least the summer.

"Strong oil demand growth, low inventories, a tight US gasoline market, and concern about possible supply disruptions have kept crude prices supported, notwithstanding the continuing high levels of Opec production," said Lord Browne.

"The same forces should underpin crude prices during the second quarter, but a rebuilding of inventories closer to seasonal norms looks likely if OPEC does not make production cuts that more closely match the seasonal drop in oil product demand."

Well received

BP said the assets of the chemicals businesses being sold were worth about $7bn, which is about half a year's net profits for the company.

This chemicals market is said to be currently overcrowded, leading to reduced returns, so most analysts were pleased by the announcement.

"This is great news," said Peter Hitchens of brokerages Cheuvreux.

"The cash will be channelled into the share buy-back programme."

Other analysts said the likely combined value of the chemicals units would be somewhat less at $3bn to $4bn, and that a float off would be the most likely disposal method.

Back in March BP announced plans for a major shares buyback and a production increase of 5% a year.