Dudley’s swansong at BP, and Micro Focus misses expectations

“The FTSE 100 made a significant recovery on Tuesday with the resources sector, one of the worst affected by China’s coronavirus outbreak, leading the way. The index jumped 1.5% to 7,437,” says Russ Mould, Investment Director at AJ Bell.

“The weaker pound helped as Boris Johnson outlined a hard-line stance to trade negotiations with the EU. Better-than-expected numbers from index heavyweight BP also contributed to a better mood after a difficult couple of weeks for the markets.

“European markets saw gains in the region of 1% to 1.2% while stocks in Asia also advanced. The Hang Seng index in Hong Kong moved 1.2% higher and Shanghai’s SSE index moved up 1.3%.

“Among commodities, Brent Crude oil traded 1.3% higher at $55.16 per barrel. The pound fell 0.07% against the US dollar to $1.2988."

BP

“After nearly a decade in charge, BP CEO Bob Dudley bows out in a decent fashion with today’s fourth quarter and full year results.

“Dudley has received plaudits for the repair job he conducted at the oil major in the wake of the Gulf of Mexico oil spill and his will be big shoes to fill.

“Fourth quarter profit was down sharply but this was to be expected given the recent pressure on oil prices. And, not for the first time in recent years, the company still outmatched expectations while also hiking the dividend.

“This is testament to the streamlined and well-oiled machine which Dudley has successfully turned the company into.

“The sell-off in oil, linked to the impact of China’s coronavirus, has somewhat spoiled Dudley’s card although he still delivered a respectable 60%-plus total return for investors over his tenure despite a lot of background volatility.

“One area where Dudley has drawn criticism is climate change and this is an issue on which his successor Bernard Looney is likely to face increasing pressure.

“A key focus is whether BP should be responsible for its own emissions or for indirect emissions caused by consumption of its oil and gas.

“This is likely to contribute to the particularly testing job which Looney faces, which arguably rivals the one Dudley faced when he took charge at the company’s moment of crisis in 2010./p>

Micro Focus

“Software firm Micro Focus has disappointed with revenue and core earnings below expectations.

“The impact of macro-economic uncertainty is one thing, but potentially more worrying for the company is the reference to customers changing their buying behaviour.

“The market is unlikely to be impressed by an admission of ‘inconsistent execution’ either, implying that to an extent Micro Focus continues to be master of its downfall.

“It’s little wonder executive chairman Kevin Loosemore is stepping down. His departure is particularly significant given he helped build the company into the large global operator it is today.

“It has certainly not all been smooth sailing over that time but the recent problems can be traced back to the multi-billion dollar acquisition of HP Enterprise in 2017. The company has really struggled with the integration of this business and it looks to be firmly in the category of deals which have destroyed rather than created shareholder value.

“There is speculation after last summer’s major profit warning and the resulting strategic review that the company might be up for sale. Loosemore’s departure would seem only to make it more vulnerable to an opportunistic bid.”

These articles are for information purposes only and are not a personal recommendation or advice.