BP posts jump in profit but warns of sanctions impact

Jul 30 2014, 02:34 IST
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SummaryOil and gas producer BP reported a sharp rise in second quarter profits on Tuesday but warned that further Western sanctions on Russia

Oil and gas producer BP reported a sharp rise in second quarter profits on Tuesday but warned that further Western sanctions on Russia could harm its business there and its relationship with Russian state oil company Rosneft.

BP said that to date, the sanctions had not had a significant effect on its business in Russia, where it makes about a third of its crude oil output, but that could change. “If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations,” it said.

BP, by far the largest foreign investor in Russia through its 19.75% stake in Rosneft, has repeatedly said it will stand by its investments in Russia since Moscow's intervention in Ukraine, where pro-Russian rebels are fighting government forces in the east of the country.

BP is not the first to make such a warning. Last week French oil services firm Technip cut margin targets for its onshore/offshore unit for this year and next.

For the second quarter, BP said underlying replacement cost profit rose to $3.6 billion, up 36% from a year earlier.

Its share of profits from Rosneft topped $1 billion in the quarter, nearly five times higher than a year earlier as a result of "favourable foreign exchange effects" with the Russian rouble. It also received an annual dividend of $690 million from Rosneft in the last two weeks.

Pfizer beats Q2 revenue forecast

Pfizer, which in May officially abandoned its bid to buy British rival AstraZeneca, reported higher-than-expected second-quarter revenue, helped by growing demand for its cancer medicines. The largest US drugmaker on Tuesday said it had earned $2.91 billion, or 45 cents per share. That compared with $14.1 billion, or $1.98 per share, a year earlier, when Pfizer received more than $10 billion in proceeds from the spinoff of its animal health business into a new publicly traded company, Zoetis. Excluding special items, Pfizer earned 58 cents per share. Sales fell 2% to $12.77 billion, hurt by declines for generic medicines that Pfizer calls established products, but they exceeded Wall Street expectations of $12.46 billion. Pfizer stuck to its prior earnings forecast of $2.20 to $2.30 per share

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