BP has vowed to “fundamentally reset” its strategy after profits plunged to the lowest level since the Covid-19 pandemic, writes Jessica Clark.

Days after it emerged feared US activist investor Elliott Management has taken a stake in the oil firm, it revealed full year earnings fell by a third to £7.2bn in 2024.

That was the lowest level since 2020. And fourth quarter profit came in below analyst expectations, tumbling 61% to a four-year low of £947m.

The sharp drop in earnings came as chief executive Murray Auchincloss faces calls to improve the oil major’s performance.

Investors want the Canadian, who took over from Bernard Looney last year, to scrap his disgraced predecessor’s unpopular green strategy.

Reports that Elliott has taken a stake in the company have added to the mounting pressure. Rival oil firms saw a sharp drop in profits in 2024 after two years of record earnings as energy prices stabilised.

But the problems go deeper at BP, which has underperformed against its competitors. Shares in its London-listed rival Shell are up around 7% over the last 12 months. In the same period, BP’s stock has fallen nearly 4%.

Yesterday’s earnings update “provided plenty of fodder” for Elliott, warned AJ Bell investment director Russ Mould. “The worst annual profit since the pandemic will have done little to reassure other shareholders that the current plan is working,” he added.

Auchincloss will update investors on BP’s strategy at a delayed capital markets day in London on 26 February.

The crucial meeting was originally scheduled to take place yesterday in New York but it was moved to allow Auchincloss to recover from surgery.

He is expected to scale back some of Looney’s net zero plans, including scrapping targets to reduce oil and gas production.

Auchincloss said: “We have been reshaping our portfolio – sanctioning new major projects and focusing our low-carbon investment – and we have made strong progress in reducing costs.

“Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns.

“It will be a new direction for BP and we look forward to sharing it at our Capital Markets Update.”

(Pic: Cheng Xin/Getty Images)