BP steps up cost cutting as profits slide

8 minutes agoNick EdserBusiness reporterBloomberg via Getty ImagesBP has reported a drop in annual profits and increased its target for cost cutting as the oil giant was hit by the fall in crude prices last year.It reported profits of $7.5bn (£5.5bn) in 2025, down from $8.9bn the year before, after the price of oil fell by about 20%.BP also said it was suspending its share buyback programme and cutting spending as it seeks to strengthen its finances.The company has recently switched strategy away from investment in renewable energy projects to refocus on oil and gas operations, and new boss Meg O'Neill, who takes up her position in April, is expected to continue this trend.O'Neill, formerly head of Australian oil and gas firm Woodside Energy, will be the the first woman to run a major global oil firm.Carol Howle, BP's current interim chief executive, said the company looked forward to O'Neill's arrival "as we accelerate our progress to build a simpler, stronger and more valuable BP for the future".The company has come under pressure from its shareholders for underperforming compared to its rivals in recent years.A year ago, BP announced it was cutting planned investments in renewable energy to spend billions of dollars more a year on its core oil and gas operations.The energy giant is trying to cut its debts, which currently stand at about $22bn.Announcing its latest results, BP said it aimed to make cost savings of $5.5bn-$6.5bn by the end of 2027. This is an increase from its previous target of up to $5bn, and comes after its decision to sell a 65% stake in its Castrol business."Management is taking some decisive action to fix the balance sheet, scrapping the buyback, doubling down on non-core disposals and upping structural cost-savings targets," said Derren Nathan, head of equity research at Hargreaves Lansdown.Profits in the final three months of the year fell 30% to $1.54bn, in a period when the price of Brent crude oil fell below $60 a barrel for the first time in more than four years.BP's annual profits have now fallen for three years in a row. They peaked at $27.7bn in 2022 when oil prices soared in the aftermath of Russia's invasion of Ukraine.Rival oil giant Shell also announced a fall in profits when it posted its annual results last week. Shell reported underlying earnings of $18.53bn for 2025, a 22% fall on the previous year.ReutersMeg O'Neill will take up her new role in AprilO'Neill takes over at BP at a difficult time for the oil giant. Its previous boss, Murray Auchincloss, stepped down after less than two years in the job.He had replaced Bernard Looney, who was dismissed by BP in 2023 after he was found to have committed "serious misconduct" in failing to disclose relationships with colleagues.Cornelia Meyer, chief executive of Meyer Resources and a former BP executive, told the BBC that O'Neill had "a stellar track record", and when it comes to reviving BP's fortunes, "if anybody can, she probably can".She added O'Neill would "instil discipline", noting "she's an oil woman, she's not a renewables woman".However, BP is facing questions from some groups over its recent investment decisions.Nick Mazan from ACCR, the shareholder advocacy and research organisation that has tabled the resolution, said by halting its share buyback and continuing to invest in oil and gas, "BP doesn't appear to have shareholder interests at heart"."While the pivot back to oil and gas has been justified by scapegoating the low carbon business, our analysis shows that the upstream business has been the source of 75% of disposal losses and impairments since 2020."