QUARTERLY results from BP and GlaxoSmithKline will dominate attention this week as the City's current reporting season steps up a gear.
Oil giant BP is expected to reveal an 11% drop in profits tomorrow as the fall-out from the Gulf of Mexico oil disaster continues to hit production and pile pressure on chief executive Bob Dudley.
BP’s profits are forecast to be in the region of £3.1bn in the third quarter, an 8% fall on the previous quarter.
Production output for the period is likely to be down 12% year on year, analysts at JP Morgan Cazenove said, to just over three million barrels of oil a day. BP was producing four million barrels before the disaster.
Dudley has faced an uphill struggle in restoring BP’s reputation following last year’s explosion in the Gulf of Mexico, which killed 11 workers and triggered the biggest oil spill in US history. The American, brought in to replace Tony Hayward, saw a major deal with Russia’s state-owned Rosneft fail, while a sale of Argentinian assets is reportedly on the brink of collapse.
Meanwhile, investors will be seeking reassurance from Dudley that the company is starting to see the beginning of the end of the Macondo well crisis.
BP’s most up-to-date estimate of the cost of the disaster stands at £24bn in order to cover the clean-up, fines and compensation – but analysts have said this could be slashed.
Royal Dutch Shell is expected to benefit from new exploration projects and rising gas prices when it also reports third-quarter results on Thursday.
UBS will disclose the impact of unauthorised trading on third-quarter results tomorrow, although the bank has said it still expects a profit despite the £1.5bn allegedly lost by trader Kweku Adoboli. The extent to which profits have been damaged by unauthorised trading is still unknown but revenues in its wealth management arm have been at similar levels to the second quarter, UBS said, in a sign investors have not pulled cash out.
The Zurich-based bank said profit in the period was driven by credit gains on financial liabilities worth £1.1bn – an indication that investors’ confidence in banks is actually falling.
