BP First Quarter 2025 Earnings: Mixed Results Highlight Industry Challenges
8min read London, April 29, 2025 — BP’s first-quarter 2025 earnings revealed a stark contrast between its top-line performance and bottom-line struggles. While revenue held above year-ago levels, falling short of revised expectations, the company’s earnings per share (EPS) collapsed under the weight of weaker refining margins and strategic shifts. The results underscore the fine line oil majors like BP walk between cost discipline, operational efficiency, and adapting to volatile market conditions.
Revenue: A Miss Against Consensus, But a Fragile Stability
BP reported Q1 2025 revenue of £47.9 billion ($47.9 billion), a 4.1% decline from Q1 2024’s £49.9 billion. This figure fell short of the consensus estimate of £57.2 billion, reflecting downward revisions by analysts in recent months. The miss was driven by lower liquid price realizations, weaker refining margins, and the impact of divestments in Egypt and Trinidad.
However, BP’s revenue outperformed some near-term expectations. For instance, Simply Wall St reported that BP beat “street low” estimates by 18%, though this contrasted with broader consensus. The discrepancy highlights divergent analyst assumptions, with some factoring in BP’s operational headwinds while others emphasized production growth.
EPS: A 56% Miss Signals Structural Challenges
The real blow came in the bottom line. BP’s adjusted EPS on a replacement-cost basis fell to £0.53 ($0.53), a 45% drop from Q1 2024’s £0.97 and a 56% miss against the £0.56 consensus estimate. The decline stemmed from:
- Weaker refining margins: The Customers & Products segment reported a £677 million profit, down from £1.29 billion in Q1 2024 due to the Whiting refinery outage and reduced fuel margins.
- Higher tax rates: A 50% effective tax rate, up from 43% in Q1 2024, further compressed earnings.
- Divestment impacts: Reduced contributions from gas marketing and trading businesses, particularly in the Gas & Low Carbon Energy segment, which saw profits plummet to £997 million from £1.66 billion.
Strategic Shifts and Cost-Cutting Priorities
BP remains laser-focused on cost discipline. The company reaffirmed its £2 billion cash cost savings target by 2026, achievable through portfolio high-grading, digital transformation, and supply chain efficiency. Notably, BP announced a £0.75 billion share buyback prior to Q2 results while maintaining its dividend at 8 cents per share—a move designed to reassure shareholders amid Elliott Management’s push for deeper cuts.
The firm also lowered its 2025 capital expenditure guidance to £14.5 billion (from £15 billion) and aims to reduce net debt to £14–£18 billion by 2027, targeting an “A” credit rating. These steps reflect a strategic pivot toward financial resilience amid industry volatility.
Market Reaction and Analyst Revisions
BP’s shares fell 13.8% month-to-date ahead of the earnings announcement, reflecting investor skepticism. Analysts have since revised their 2025 revenue forecasts downward to £180.61 billion, a 4.5% decline from 2024, with further expected declines in 2026.
Conclusion: A Cautionary Balance Between Cost and Growth
BP’s Q1 2025 results paint a company navigating a precarious equilibrium. While production increases and cost-saving initiatives offer hope, the EPS collapse underscores the fragility of refining margins and the risks of overexposure to volatile commodity markets.
Investors should note:
- Near-term risks: Weaker refining margins and geopolitical uncertainties could prolong earnings pressures.
- Long-term opportunities: The $2 billion cost target and asset divestments (projected to raise $3–$4 billion in 2025) position BP to weather volatility while focusing on core assets.
The stock’s valuation—currently trading at 7.2x forward EV/EBITDA—suggests markets are pricing in caution. Yet, BP’s disciplined approach and dividend stability may attract defensive investors.
In the end, BP’s journey in 2025 will hinge on whether its cost cuts and portfolio shifts can offset margin pressures, proving that resilience, not growth, is the new benchmark for oil majors.
Ruth Simon is a financial journalist specializing in energy and corporate strategy. Her analysis focuses on translating complex financial data into actionable insights for investors.
