Falling oil prices and weaker refining margins led to a 53 per cent slump in profits at oil giant BP.
The haul of £1.9 billion between April and June was well down on the £4.1 billion seen a year ago, a period when oil prices were approaching record high levels.
However, chief executive Tony Hayward said the figure was 30 per cent higher than the first quarter of the year, helped by a four per cent rise in BP’s daily production to more than four million barrels of oil equivalent in the three months.
He added: “We are in turbulent times, volatile and uncertain. But we continue to steer a steady course through choppy waters.”
Despite the inevitable impact of falling crude prices on profits, BP has shown signs of progress in turning around years of under-performance, particularly in its refining operation.
Two years into the turnaround programme, Mr Hayward said BP was making good progress in growing its exploration and production business, as well as turning around its downstream operations and improving efficiency.
He added that the company’s target for a reduction of two billion in costs in 2009 had already exceeded, with a further one billion saving expected over the rest of the year.
The company reduced headcount by 3,000 last year and is on track for another 5,000 by the end of 2009.
“We will continue to push efficiencies into the group and make sure every dollar counts,” Mr Hayward said.
As well as cost savings and production gains, BP’s performance against the previous quarter has been helped by firmer oil prices amid hopes for a recovery in the world economy.
Mr Hayward said: “The overall picture is of energy demand now stabilising following significant falls in the first half of the year. We see little evidence of any growth in demand and expect the recovery to be long and drawn-out.”
BP’s rival Royal Dutch Shell is also due to report results this week, with analysts expecting second quarter profits of around £1.45 billion. Analysts said BP’s profit and cost-saving figures were ahead of expectations, although this failed to prevent a fall in its share price.
Peter Hitchens, an analyst at Panmure Gordon stockbrokers, said the company’s underlying performance appeared to be better than its rivals.
“The company is now starting to see its much-promised production increases and is starting to close the gap with its peers on the downstream operations.
“The company should therefore show a better performance than its peers over the next year.”
BP maintained its second-quarter dividend payment at 8.5 pence a share, a rise of 21 per cent in sterling terms due to the stronger dollar.