BP set to reveal profits pain

BP has announced a 53% slump in profits

BP is expected to reveal further profits pain in its half-year results after the recession impacted oil prices and global demand for crude.

The oil giant revealed a 62% slump in first quarter profits earlier this year after prices fell in the wake of last year's oil bubble.

Analysts are expecting the firm to have seen a similar profits dive in the second quarter, with forecasts for 2.8 billion US dollars (£1.7 billion) in underlying profits between April and June compared with 8.6 billion dollars (£5.2 billion) a year ago.

But despite the inevitable impact of falling crude prices on profits, BP has been making good progress in turning around years of under performance in its refining performance and the market will look for evidence that the momentum is continuing, as well as assurances over the dividend.

The company ended a two-year hunt to find a chairman in June with the appointment of relative unknown Carl-Henric Svanberg as chairman.

The Ericsson chief executive takes over from Sir Peter Sutherland in January, joining at a challenging time after almost 40% of its shareholders voted against the company's remuneration report at this year's annual meeting.

BP incurred the wrath of investors after handing significant pay rises to senior directors last year, with Sir Peter paid £600,000 as chairman after a rise of around 14% on the previous year.

Despite recent troubles, the group pleased the City earlier this year when its first quarter profits came in ahead of expectations and it announced a 4% increase in the dividend payout for investors.

Chief executive Tony Hayward has been driving down costs and seeking to improve efficiency, already reducing headcount by 3,000 last year and on track for 5,000 by the end of 2009.

Firmer oil prices on recent economic recovery hopes has also acted as a fillip, with BP shares up around 10% over the past two weeks.