:00:00. > :00:08.This is Business Live from BBC News with Alice Baxter and Sally Bundock.
:00:09. > :00:12.They may pump the black stuff, but they've now headed into the red.
:00:13. > :00:15.Oil giant BP reveals just how bad things are with their latest set
:00:16. > :00:18.of results as they grapples with falling revenues and further
:00:19. > :00:37.Live from London, that's our top story on Tuesday, 2nd February.
:00:38. > :00:44.Oil giant BP has reported an annual loss of $6.5 billion in 2015,
:00:45. > :00:47.its worst results in more than 20 years.
:00:48. > :00:51.The British company struggled with a sharp downturn
:00:52. > :01:02.Also in the programme, Alphabet, Google's parent company,
:01:03. > :01:06.has surpassed Apple as the world's most valuable company
:01:07. > :01:08.after its latest set of bumper earnings.
:01:09. > :01:13.We'll keep you up-to-date with all the latest from the markets.
:01:14. > :01:16.Asian shares slip on sliding crude oil prices and and downbeat
:01:17. > :01:19.And Europe follows suit, opening lower.
:01:20. > :01:25.And the boss of Icelandair will be with us in the studio to tell us
:01:26. > :01:29.about its attempts to mix it up with the big boys of global air
:01:30. > :01:34.travel and some try some unusual methods to win passengers.
:01:35. > :01:36.Whatsapp boasts it now has a billion users.
:01:37. > :01:58.Oil Giant BP has reported a headline loss of $6.5 billion for 2015 as it
:01:59. > :02:02.massively downgraded the value of its oil reserves
:02:03. > :02:10.Stripping out the effect of that adjustment, the company made profits
:02:11. > :02:13.of $5.9 billion for the year - a 51% fall since last year
:02:14. > :02:17.and the figures for the last quarter showed a 90% drop
:02:18. > :02:25.As you can see, the firms share price has had a rough ride over
:02:26. > :02:31.While dealing with the plummeting oil prices it has also been hit
:02:32. > :02:34.with billions of dollars of fines relating to the Deep Water Horizon
:02:35. > :02:41.Last month the company said it would cut 4,000 jobs globally
:02:42. > :02:46.while slashing billions of dollars from spending on new projects.
:02:47. > :02:53.Today the firm also announced that it would cut up to three
:02:54. > :02:59.news will be worrying for shareholders and in particular
:03:00. > :03:02.pension funds that rely on the large dividend which is currently worth
:03:03. > :03:11.This is how the shares are doing this morning as well
:03:12. > :03:29.BP currently down over 5.6%. Brent Crude hovering under $34, so that
:03:30. > :03:36.recent rally we saw, that's pairing back.
:03:37. > :03:41.I am joined now by Markets analyst, Jason Gammel from the investment
:03:42. > :03:56.Al Is outlined the grim numbers there? Yes, it was a disappointing
:03:57. > :04:03.number. That is a bit troubling. The cash generation was also relatively
:04:04. > :04:06.weak in the quarter. They did generate ?5 billion in cash but ?3
:04:07. > :04:13.billion was from changes in the balance sheet. Why do you think they
:04:14. > :04:17.are retaining the dividend? Well, I think the dividend is something that
:04:18. > :04:22.is fairly sacrosanct at BP and they want to be able to distribute cash
:04:23. > :04:32.to shareholders, the owners of their business. The dividend is in 2016
:04:33. > :04:37.going to be kind of a trade-off. There's about ?17 billion, they'll
:04:38. > :04:42.generate ?20 billion so there is about a $3 billion short fall that
:04:43. > :04:48.needs to come in through from incremental debt. You wonder going
:04:49. > :04:51.forward what will the balance be between debt and capital expenditure
:04:52. > :04:56.in the future and also where its investment is in the long-term
:04:57. > :05:01.because against its peers, BP has lowest production growth really at
:05:02. > :05:05.the moment? Yes. That's right. I think really most companies are
:05:06. > :05:09.expecting that we'll see an increase in oil price from where we are at
:05:10. > :05:19.today. So I think that really, the safety of the dividend is somewhat
:05:20. > :05:23.reliant on on improvement in price. BP will invest but their growth is
:05:24. > :05:29.limited than their peers so they'll have catching up to do. A new Depp
:05:30. > :05:34.tell Chief Executive was announced yesterday, Lemar McKay, who's been
:05:35. > :05:37.at BP for some time. Is this the beginning of a succession plan as
:05:38. > :05:41.far as Bob Dudley is concerned or is it about dealing with the
:05:42. > :05:46.challenging times? I would tend to lean towards the latter but we don't
:05:47. > :05:49.really know, this was only announced yesterday afternoon, I imagine
:05:50. > :05:56.they'll speak about it on today's conference call. He's been at BP for
:05:57. > :06:01.a long time, perhaps not the right age to be successor to Bob Dudley
:06:02. > :06:04.given that they are only about two years apart I believe but we'll hear
:06:05. > :06:13.more about that this afternoon. Thank you so much, Jason Gammel. BP
:06:14. > :06:18.very much in focus, a big player on the FTSE 100 and the shares down
:06:19. > :06:24.over 5%. So let's have a look at some of the stories on the BBC live
:06:25. > :06:28.page in a minute, but you have other stories to come first.
:06:29. > :06:31.In other news, it's reported Yahoo's boss Marissa Mayer is set to reveal
:06:32. > :06:35.cost-cutting plans that include slashing 15% of its workforce -
:06:36. > :06:40.that's roughly 1,600 jobs, and closing some business units.
:06:41. > :06:44.Plans could be announced after Yahoo's fourth-quarter
:06:45. > :07:03.WhatsApp has hit the billion user mark. The number of people using it
:07:04. > :07:06.has more than doubled since Facebook bought it in 2014.
:07:07. > :07:10.Russia is lining up major state companies including Aeroflot,
:07:11. > :07:13.diamond miner Alrosa and Rosneft, for potential privatisation
:07:14. > :07:15.as the country looks for options to recoup revenues lost
:07:16. > :07:20.The latest slide in crude prices is expected to drive Russia
:07:21. > :07:23.into a second year of recession and has ripped a gaping hole
:07:24. > :07:41.One story I would like to mention is national Australia Bank for some
:07:42. > :07:46.time's been talking about trying to change its business and part of that
:07:47. > :07:51.has been the demerger of Clydesdale bank. It would seem that that
:07:52. > :07:55.demerger is off or at least the floatation is delayed for now.
:07:56. > :07:59.Because of a credit rating query. That is the story that's broken in
:08:00. > :08:03.the last hour which would effect many, many of you who're customers
:08:04. > :08:05.with Clydesdale bank so keep an eye on that story. More on that on the
:08:06. > :08:25.business live page. Sainsbury's have made an offer for
:08:26. > :08:29.Home Retail Group who own Argos. A previous offer was rejected. We know
:08:30. > :08:33.a deal is now going through. The jury is still out as to whether this
:08:34. > :08:40.is a good deal. A lot more information on that as well on the
:08:41. > :08:46.business live, as well as BP, the news we have just had out later in
:08:47. > :08:48.the programme. We have Kamal Ahmed joining us shortly.
:08:49. > :08:51.Let's take a look round the world at what business stories
:08:52. > :08:59.And profits at games maker Nintendo have fallen 36% because of a lack
:09:00. > :09:13.What is the latest? If you love playing video games, Nintendo is
:09:14. > :09:17.famous for Super Mario and Splatoon and the like. The profits fell by
:09:18. > :09:23.36% in the most recent quarter, the three months to December. The figure
:09:24. > :09:29.came in at $241 million, below analyst estimates. The reason really
:09:30. > :09:34.is because they need more hit titles, more games, software that
:09:35. > :09:41.will sell their hardware, so we saw lower holiday sales of the Nintendo
:09:42. > :09:44.Wii and the 3DS because people are not snapping up titles like they
:09:45. > :09:49.used to. That said, it's a big year for the company. Nintendo is looking
:09:50. > :09:53.for a new growth driver so there'll be a big shake-up of the company,
:09:54. > :10:03.the biggest since 1970. So next month we are going to see the debut
:10:04. > :10:10.of its first smartphone game call. It's also developing a new console
:10:11. > :10:14.and there may be more on virtual reality. Investors were not
:10:15. > :10:17.expecting too much because the shares fell about 1.5% in Tokyo
:10:18. > :10:19.ahead of the afoundsment. Let's stay in the region
:10:20. > :10:24.because Asian shares fell on Tuesday as crude oil extended it's heavy
:10:25. > :10:26.losses from the previous session on continued oversupply fears,
:10:27. > :10:29.hitting Asia's beleaguered energy stocks as most regional markets
:10:30. > :10:32.retreated from a recent rally. Weak factory data from China
:10:33. > :10:34.to the United States also added to the selling pressure,
:10:35. > :10:38.although Shanghai and Hong Kong did Japan's Nikkei ended down 0.6%
:10:39. > :10:46.as investors locked in profits after two straight days of big gains
:10:47. > :10:51.following the Bank of Japan's surprise decision to introduce
:10:52. > :10:53.negative interest rates In Europe all the major indexes have
:10:54. > :11:00.followed Asia in opening lower. Alphabet, the company which owns
:11:01. > :11:06.the search engine Google, has now overtaken Apple
:11:07. > :11:08.to become the world's most Here's Nadia Tawfik to tell us more
:11:09. > :11:13.on this and what's making the business world in
:11:14. > :11:23.the United States today. Alphabet is $568 billion, so
:11:24. > :11:28.surpassing Apple. If you look at the report, it was very much in line
:11:29. > :11:33.with what investors expected. The revenue was up around 17% for the
:11:34. > :11:37.quarter, off the back of its core Google business really and the
:11:38. > :11:41.strength there with mobile ads and YouTube ads. So that was to be
:11:42. > :11:48.expected. What we were looking for in this report is how the other part
:11:49. > :11:52.of Alphabet, this new company with its other bets, other ventures which
:11:53. > :11:54.are more ambitious, how that was affecting the overall revenue and
:11:55. > :12:06.outlook of the company. Joining us at the markets
:12:07. > :12:09.and the stories in the news He's the Chief Executive
:12:10. > :12:19.for Nutmeg Investment Management. The first overnight results coming
:12:20. > :12:23.through from Iowa. Quite interesting wasn't it? Absolutely fascinating.
:12:24. > :12:26.We had so much last night, the transfer deadline day in the
:12:27. > :12:31.football, the American election going on. And all this wonderful
:12:32. > :12:37.economic and markets news as well, so for nerd like me it was just a
:12:38. > :12:42.dream. You didn't sleep? Not at all. This story has three pillars to it.
:12:43. > :12:46.The first one is that Ted Cruz is a really serious candidate and he's
:12:47. > :12:51.come out having won the Iowa vote with a large share, about 28% of the
:12:52. > :12:56.voters. Everybody thought that Trump would be the man because so many
:12:57. > :12:59.first-time voters turned out. Not in Iowa though, because it's a kind of
:13:00. > :13:05.Ted Cruz battleground, he was expecting to do well in this one? He
:13:06. > :13:10.put so much effort into Iowa so if he hadn't won it would have been a
:13:11. > :13:16.disaster. We saw the rise of Marco Rubio and I learnt that Iowa's one
:13:17. > :13:21.of, if not the only state which has proportional voting, so the others
:13:22. > :13:28.are all absolute, but in Iowa, Ted Cruz will get six votes, Trump will
:13:29. > :13:31.get five and Rubio will as well, so they're almost tied.
:13:32. > :13:35.Interesting that Hillary Clinton and Bernie Sanders are neck and neck?
:13:36. > :13:44.Oh, and we don't know which way that is going to go. A couple of years
:13:45. > :13:53.ago Romney was declared the winner, then Rick Santorum turned out to be
:13:54. > :13:57.the winner. Amazingly close there. Really strong evangelical support.
:13:58. > :14:05.Let's look at the Financial Times because this story here about a
:14:06. > :14:09.spate of privatisations, a real reversal of what we have seen over
:14:10. > :14:14.the course of Putin's decade and a half of rule in Russia where we have
:14:15. > :14:17.seen a sort of maybe perhaps not straightforward nationalisation of a
:14:18. > :14:23.lot of businesses but we have seen a decline in the sell off of shares of
:14:24. > :14:28.a lot of the companies there? There's two reasons for that. One is
:14:29. > :14:33.the sales in the early '90s which created the oligarch culture or the
:14:34. > :14:38.few people, you know, the public have really rebelled against that,
:14:39. > :14:42.there's been a big push back from the Russian population and Putin
:14:43. > :14:46.recognises that. He doesn't want to make the same mistakes again. They
:14:47. > :14:50.have to do something because of the hit the Russian economy is taking
:14:51. > :14:53.with the oil prices? It's absolutely huge, the hole they have in their
:14:54. > :14:59.budget. They are going to cut 10% of Government spending this year and
:15:00. > :15:05.again, he's just asked his counterpart to say, please cut
:15:06. > :15:08.another 5% 2010% off, can you imagine cutting 20% off the national
:15:09. > :15:12.budget? ! The question is, could they sell anything in good value
:15:13. > :15:14.because lots of their assets are energy based and now would be the
:15:15. > :15:20.time to sell. Thank you very much.
:15:21. > :15:22.Putinisation is what some are calling it on social media, as
:15:23. > :15:25.opposed to privatisation. Icelandair looks
:15:26. > :15:28.to freeze out the competition by offering the company's staff
:15:29. > :15:30.including pilots and even the Chief Executive as personal tour
:15:31. > :15:32.guides during transatlantic You're with Business
:15:33. > :15:43.Live from BBC News. Sainsbury's has offered ?1.3 billion
:15:44. > :16:01.to win control of Argos He is up north. Ben, tell us more.
:16:02. > :16:05.Good morning girls. That's right, ?1.3 billion is what is on the
:16:06. > :16:09.table. The deal is not yet a done deal. It just simply buys
:16:10. > :16:14.Sainsbury's a little bit more time. They have agreed in principle this
:16:15. > :16:19.cash and shares offer for Home Retail Group which owns the
:16:20. > :16:23.retailer, Argos. They have got until 23rd February to finalise the deal.
:16:24. > :16:27.You will know today is what we call put up or shut up dayment they had
:16:28. > :16:34.to make a revised bid or walk away. The details of the revised bid is a
:16:35. > :16:38.63% premium on the closing price of those Home Retail shares in January.
:16:39. > :16:42.A deal they were holding out for, you will know they originally made
:16:43. > :16:45.an offer that valued the firm at ?1 billion, but it was rejected in
:16:46. > :16:49.November. Details of that only coming to light just recently. So
:16:50. > :16:56.this is a revised offer, a higher offer, one worth ?1.3 billion.
:16:57. > :17:03.Sainsbury's deciding to put up then. Are job cuts at Argos inevitable, do
:17:04. > :17:06.we think? What you look at in the detail is what it means for areas or
:17:07. > :17:11.towns or cities across the country that have both a Sainsbury's and an
:17:12. > :17:15.Argos in close proximity. Sainsbury's says it expects to shut
:17:16. > :17:18.a third of stores if they are close together and that is part of its
:17:19. > :17:29.efforts to try and cut costs. It says it wants to save ?120 million
:17:30. > :17:36.by rationalising the business. It means putting concessions from Argos
:17:37. > :17:40.in a Sainsbury's store. That's inevitable and it is trying to
:17:41. > :17:44.remove the overlap. The big question of why Sainsbury's is interested in
:17:45. > :17:46.Argos. It comes down to the infrastructure that Argos has in
:17:47. > :17:50.place. It is known as a retailer where you can get this stuff. Argos
:17:51. > :17:53.spent a lot of money building the infrastructure to make sure people
:17:54. > :17:57.are able to get deliveries quickly and that's something that
:17:58. > :18:02.Sainsbury's wants. Ben, it is really good it check-in with you. Ben
:18:03. > :18:14.Thompson there. He will be back tomorrow. This is Stelios, he has
:18:15. > :18:23.launched an online grocery shop. You're watching Business Live.
:18:24. > :18:34.Our top story: Underlying fourth-quarter profits
:18:35. > :18:45.fell to $196 million, compared with $2.2 billion
:18:46. > :18:47.for the same period Despite the poor results
:18:48. > :18:50.the firm says its dividends Let's get the inside track
:18:51. > :18:54.on what it takes to make a breakthrough in the competitive
:18:55. > :18:56.world of Air travel. Icelandair is an Islandic airline
:18:57. > :18:59.which operated out of 39 cities In recent years the airline has
:19:00. > :19:02.grown considerably and this year they hope to transport 3.5 million
:19:03. > :19:05.passengers that's 500,000 more One of the reasons for that growth
:19:06. > :19:13.is Iceland's geographical location. Icelandair is able to offer low cost
:19:14. > :19:15.one-stop transatlantic flights to passengers from other
:19:16. > :19:17.countries in Europe The company now wants to build
:19:18. > :19:22.on this success and is offering passengers on transatlantic routes
:19:23. > :19:24.the option to stay in Iceland for up to seven nights at no
:19:25. > :19:32.additional airfare cost. As a bit of a sweetener the firm
:19:33. > :19:36.also says it will allow customers to use the company's staff including
:19:37. > :19:39.pilots and even the Chief Executive as a personal tour guide
:19:40. > :19:41.during their stopovers. With me is Birkir Holm Gounason,
:19:42. > :19:57.Chief Executive for Icelandair. Welcome. Thank you. Let's talk about
:19:58. > :20:00.this new buddy stop over idea that you're launching today. How will it
:20:01. > :20:06.work? Basically, we have been offering a
:20:07. > :20:10.stopover in Iceland since the 60s so people have the option to stay up to
:20:11. > :20:16.seven nights on the way to North America or on the way back. Today we
:20:17. > :20:20.are launching a service where staff will be a stopover buddy for one day
:20:21. > :20:26.and I will be one of the buddies and we're going to take the passengers
:20:27. > :20:29.around Iceland, show them our favourite places, locations and
:20:30. > :20:33.restaurants and activities. Why do you want to introduce this? Do you
:20:34. > :20:37.think Iceland is a country that's difficult to navigate as a tourist?
:20:38. > :20:44.The general travel trend is changing. We did a survey among
:20:45. > :20:48.11,000 tourists and people would like to spend more time with the
:20:49. > :20:58.locals and the local culture instead of going to big tourist attractions.
:20:59. > :21:01.So we believe the Airbnb and if you go to your friends you get to see
:21:02. > :21:05.more interesting places. You know where to stay, where to eat, so we
:21:06. > :21:07.want to be friendly. We are friendly, but we would like to show
:21:08. > :21:12.it! But for those who are trying to get
:21:13. > :21:17.from say London to a part of the United States, will look at going
:21:18. > :21:21.via Iceland or via somewhere else to really reduce their costs? Yeah,
:21:22. > :21:28.exactly. They are going to basically cut their air fare in half and go
:21:29. > :21:33.via another destination. They don't necessarily want to stay for seven
:21:34. > :21:37.days, they want to get on to cfl and crack on with their holiday there.
:21:38. > :21:42.What makes you think it will be successful? The stopover project
:21:43. > :21:47.increased 60% if recent years. A lot of people like to take a stopover in
:21:48. > :21:53.Iceland because you don't have to pay anything additional in the air
:21:54. > :21:58.fare. People go to the Will you Lagoon and all that. In our survey
:21:59. > :22:01.and for the UK market, almost 70% of the people said they were
:22:02. > :22:06.embarrassed they look liked a tourist. 23% said... No one wants to
:22:07. > :22:10.look like a tourist, do they? 23% said they would rather like to
:22:11. > :22:15.experience the local cultures, instead of going to the big tourist
:22:16. > :22:20.attractions and 46% said that they would like to mix with the locals.
:22:21. > :22:25.So I think this is something the travel trends are changing and
:22:26. > :22:27.people if you look at Airbnb, house exchanges, people like to be around
:22:28. > :22:32.the locals. A really interesting idea. It is. We shall watch to see
:22:33. > :22:34.if it is successful or not. Thank you for coming. Thank you. And
:22:35. > :22:38.telling us all about that. Let's take a closer look at a couple
:22:39. > :22:53.of the bigger stories we have been Russian is lining up several
:22:54. > :22:56.companies for potential privatisation as the Government
:22:57. > :23:08.looks to compensate for the low price of oil. The New York Times is
:23:09. > :23:15.reporting that Ted Cruz won the Iowa caucuses.
:23:16. > :23:20.EasyJet airline founder Stelios has opened a trial Easyfood shop with
:23:21. > :23:26.groceries sold at the knockdown price for 25 pence. I'm sure I can
:23:27. > :23:31.pick up veg for 25 pence already. It is all orange inside as well!
:23:32. > :23:34.Both BP and Alphabet have their results out and it's fair
:23:35. > :23:40.to say they are at opposite ends on the spectrum.
:23:41. > :23:46.Nice to see you, Kamal. It is such a busy day. I feel like I'm having to
:23:47. > :23:51.catch my breath here. Do you want to start with BP and give us your
:23:52. > :23:54.thoughts on that? BP, a really interesting business, clearly hugely
:23:55. > :23:59.affected by the oil price. It has fallen 40% in the last year. If you
:24:00. > :24:04.imagine an oil company, it is made out of two big drivers, oil
:24:05. > :24:07.production, North Sea, Gulf of Mexico, exploration, that's
:24:08. > :24:12.obviously been hit by the oil price drop. And it means that that is
:24:13. > :24:16.really struggling now and fell to a loss in the final three months of
:24:17. > :24:21.2015, compared to 2014, the second part of the business is downstream,
:24:22. > :24:25.that's the refining, the selling of fuel to retail customers, that is
:24:26. > :24:28.also struggling because the global slowdown has meant there is less
:24:29. > :24:32.demand for refined products, it is losing more jobs in the downstream,
:24:33. > :24:36.so these two engines are both spluttering and that's the problem.
:24:37. > :24:38.The big message from Bob Dudley the Chief Executive has been this
:24:39. > :24:43.morning, we will commit to the dividend. So at least investors and
:24:44. > :24:48.savers and pension funds from around the world will be heaving a sigh of
:24:49. > :24:51.relief. I was going to ask you about that. Many people are asking the
:24:52. > :24:54.question, about the dividend can they really continue with that given
:24:55. > :24:58.their financial situation? Well, obviously making a loss in parts of
:24:59. > :25:02.your business is unsustainable. When I spoke to Bob Dudley two weeks ago,
:25:03. > :25:06.he said that the oil price he thought would rise towards the end
:25:07. > :25:10.of the year. He made a big bet that that would be the case, because cost
:25:11. > :25:15.efficiencies, job cuts, taking on new debt, can only last for so long.
:25:16. > :25:21.Otherwise, there will have to be another radical slimming of the
:25:22. > :25:24.business. Quickly, Kamal, Alphabet, Google's parent company surpassing
:25:25. > :25:30.Google as the world's most valuable company? Spectacular. A company that
:25:31. > :25:39.has diversified in sharp contrast to Apple. Apple focussed on two or
:25:40. > :25:42.three well done products. Google, android mobile, research, people are
:25:43. > :25:46.using those things and they are highly, highly profitable. Thank
:25:47. > :25:56.you, Kamal. So much more analysis online.
:25:57. > :26:13.Thanks for your company. More Business Live tomorrow. Bye-bye.
:26:14. > :26:18.Hello there. Storm Henry it starting to pull away from the UK now. This
:26:19. > :26:19.wet weather front will bring