BP PLC: Profit Decline, Buyback Suspension and a Shift in Strategy
BP PLC reported a 16 % drop in underlying replacement‑cost profits for 2025, falling to 7.49 billion U.S. dollars (5.47 billion GBP). The decline follows a steep fall in crude‑oil prices during the second half of 2025, and it is the sharpest slide in the company’s preferred earnings measure in recent years.
The London‑listed oil giant’s management confirmed that the earnings hit is linked to a combination of lower oil‑price exposure and higher production costs. The company’s core revenue stream from upstream oil production and downstream retail sales has weakened, while its low‑carbon and gas businesses have shown modest year‑over‑year gains.
Suspension of Share Buybacks
In a move aimed at strengthening its balance sheet amid falling commodity prices, BP has halted its quarterly share‑buyback programme for 2026. The decision mirrors the 2020 pause that occurred during the first wave of the coronavirus pandemic, when oil prices collapsed and energy firms tightened liquidity. The most recent buyback had been worth 750 million USD, down from 1.75 billion USD in April of the previous year.
BP’s board cited the need to free up cash for “oil and gas opportunities” and to support its broader turnaround plan. The suspension is expected to increase the company’s liquidity position, allowing it to invest in higher‑margin projects and to pursue its four‑fold objective of growing cash flow, cutting costs, boosting earnings and simplifying operations.
Operational Performance
Quarterly results show that both oil production and operations revenue slipped again in the fourth quarter, in line with the global downturn in wholesale oil prices. Despite the decline in traditional oil and gas earnings, BP’s low‑carbon and gas divisions posted yearly gains, signalling a gradual shift in the company’s portfolio mix.
BP’s 2025 financials also revealed a 32 % increase in net profits to 7.5 billion USD (5.5 billion GBP) – a figure that surprised analysts on the upside. The rise was attributed to higher sales in the low‑carbon segment and effective cost‑control measures, though it was not sufficient to offset the larger downturn in oil‑price‑driven earnings.
Market Reaction and Outlook
The company’s share price, which closed at 477.65 GBP on 8 February 2026, remained within the 52‑week high of 481.35 GBP, suggesting that investors have largely accepted the company’s short‑term earnings squeeze in favour of the long‑term strategic pivot. The price‑earnings ratio sits at 68.45, reflecting the market’s expectation that BP’s profitability will recover as oil prices stabilize and low‑carbon initiatives mature.
BP’s forthcoming chief executive, who is expected to take the helm in April, will inherit a business at a turning point. With the buyback programme paused and cost‑cutting accelerated, the new leadership will focus on accelerating the transition to a “simpler and more profitable” model, while ensuring the company remains resilient in a volatile commodity market.
In summary, BP PLC’s latest figures underscore the challenges posed by weak oil prices, but also highlight the company’s strategic response: a suspension of share buybacks, an emphasis on cost discipline, and a measured expansion into low‑carbon energy. Investors will be watching closely to see how these initiatives translate into profitability and shareholder value in the coming months.
