OIL giants BP and Shell are expected to report large falls in second-quarter profits this week.
BP’s underlying profits between April and June last year stood at £5.2billion, but consensus forecasts from 27 analysts predict a surplus around a third of this level this year tomorrow – at £1.7billion.
Rival Royal Dutch Shell is anticipated to post underlying second-quarter profits on Thursday of around £1.5billion, compared with a return of £5.2billion a year earlier.
BP 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 in January but joins at a challenging time after almost 40% of its shareholders voted against the company’s remuneration report at this year’s annual meeting.
Shell reports its first set of results under new chief executive Peter Voser, who took over from long-serving Jeroen van der Veer at the beginning of the month.
There is currently a major restructuring at the business, which is expected to lead to job losses.
The firm also suffered a dramatic shareholder revolt in May amid fury over recent pay awards as almost 60% of investors voted against its remuneration report.
Shell has come under fire after making huge payouts as part of its long-term incentive plan, despite missing performance targets. Meanwhile, a chilly winter and greatly reduced wholesale gas prices are expected to be reflected in British Gas’s half-year results when parent company Centrica reports on Thursday.
The energy giant has already announced that its residential arm was trading ahead of last year due to increased demand for gas and power during cold snaps in the UK and North America.
British Gas owner cut residential gas prices by 10% in February, followed by a similar cut in electricity tariffs after falling wholesale commodity prices also benefited its domestic business.
John Musk, of Nomura Equity Research, predicted the residential arm would see a 70% boost in operating profits, to £283million in the half year. But he said the business as a whole was expected to post adjusted pre-tax profits of £843million in the period, a 15% slide.
But he said the focus should be on underlying earnings, stripping out major acquisitions and losses on long-term industrial and wholesale supply contracts. He added that while oil prices – which have jumped from their lows at the beginning of this year – were a key driver of sentiment on the company, its moves to acquire other energy firms helped it to hedge costs more effectively.
Centrica is in the midst of an attempted hostile takeover bid for North Sea gas company Venture Production, which it wants to buy to boost its gas production and reduce its dependence on volatile wholesale markets.
Buying Venture would mean that Centrica could supply 60% of its energy from its own assets and resources.
Centrica has also dipped its toe into the nuclear power sector with a 20% stake in generation firm British Energy after buying the interest from France’s EDF for £2.3billion in April.
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