BP Halts Share Buy-Backs as Annual Profits Slide to $7.5bn for 2025
BP has suspended its share buy-back programme after reporting a significant decline in annual profits, as the oil and gas company grapples with falling global oil prices and mounting pressure to revitalise its fortunes under a new chief executive.
Earnings Fall Amid Oil Price Slump
The company's underlying earnings dropped to just below $7.5bn (£5.5bn) for 2025, down from almost $9bn in 2024. This marks the third consecutive year of declining profits, with the steepest rate of fall since the Covid-19 pandemic. The downturn is attributed to a sustained slump in global oil prices, which have eroded revenue across the energy sector.
In response, BP will halt quarterly share buy-backs from investors for the first time since the early stages of the pandemic. During that period, a global collapse in oil prices forced the 116-year-old company into a record loss. The decision to suspend buy-backs is aimed at strengthening BP's balance sheet, but it piles pressure on the firm to win over investors with a new strategic vision.
Leadership Changes and Strategic Shifts
Meg O'Neill, the former head of Australian oil company Woodside Energy, is set to become BP's new chief executive in April. She will be the third boss in as many years and is expected to enforce "rigour" in BP's turnaround plan. Meanwhile, activist shareholders continue to push the company to prepare for a long-term decline in fossil fuel demand.
Carol Howle, BP's interim chief executive, stated that the company has made progress against its four primary targets: growing cashflows, increasing shareholder returns, reducing costs, and strengthening the balance sheet through asset sales. "There is more work to be done, and we are clear on the urgency to deliver," Howle said. "We are in action and we can and will do better for our shareholders."
Quarterly Performance and Investor Criticism
BP reported that fourth-quarter earnings fell 30% quarter-on-quarter in the last three months of the year, to $1.54bn. However, this figure was 32% higher than a year earlier and in line with City expectations. Despite this, the company faces criticism from investor groups over its strategic direction.
Mark van Baal, founder of the shareholder activist group Follow This, commented, "BP is in dire straits because the company has drifted without a consistent strategic direction." The group has filed a resolution before BP's annual investor meeting in April, calling for the company to disclose its strategy for creating shareholder value under scenarios of declining demand for fossil fuels.
Van Baal added, "After a half-hearted energy transition, the company is now doubling down on fossil fuels in a market that will soon start to shrink. If BP cannot grow profits and restore its dividend in a growing market, how will the company create shareholder value in a declining one?"
Focus on Fossil Fuels and Industry Comparisons
As part of its plan to refocus on fossil fuels after attempts to move into big renewable energy investments, BP commissioned seven new oil and gas projects last year. Five of these projects were delivered ahead of schedule, indicating a renewed emphasis on traditional energy sources.
In contrast, rival Shell reported a 22% fall in adjusted earnings to $18.5bn (£13.6bn) for 2025, but announced $3.5bn worth of share buy-backs – its 17th consecutive quarter of at least $3bn in buy-backs. This highlights the divergent strategies within the industry as companies navigate shifting market dynamics and environmental pressures.
