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This is Business Live from BBC News with Alice Baxter and Sally Bundock.
They may pump the black stuff, but they've now headed into the red.
Oil giant BP reveals just how bad things are with their latest set
of results as they grapples with falling revenues and further
Live from London, that's our top story on Tuesday, 2nd February.
Oil giant BP has reported an annual loss of $6.5 billion in 2015,
its worst results in more than 20 years.
The British company struggled with a sharp downturn
Also in the programme, Alphabet, Google's parent company,
has surpassed Apple as the world's most valuable company
after its latest set of bumper earnings.
We'll keep you up-to-date with all the latest from the markets.
Asian shares slip on sliding crude oil prices and and downbeat
And Europe follows suit, opening lower.
And the boss of Icelandair will be with us in the studio to tell us
about its attempts to mix it up with the big boys of global air
travel and some try some unusual methods to win passengers.
Whatsapp boasts it now has a billion users.
Oil Giant BP has reported a headline loss of $6.5 billion for 2015 as it
massively downgraded the value of its oil reserves
Stripping out the effect of that adjustment, the company made profits
of $5.9 billion for the year - a 51% fall since last year
and the figures for the last quarter showed a 90% drop
As you can see, the firms share price has had a rough ride over
While dealing with the plummeting oil prices it has also been hit
with billions of dollars of fines relating to the Deep Water Horizon
Last month the company said it would cut 4,000 jobs globally
while slashing billions of dollars from spending on new projects.
Today the firm also announced that it would cut up to three
news will be worrying for shareholders and in particular
pension funds that rely on the large dividend which is currently worth
This is how the shares are doing this morning as well
BP currently down over 5.6%. Brent Crude hovering under $34, so that
recent rally we saw, that's pairing back.
I am joined now by Markets analyst, Jason Gammel from the investment
Al Is outlined the grim numbers there? Yes, it was a disappointing
number. That is a bit troubling. The cash generation was also relatively
weak in the quarter. They did generate ?5 billion in cash but ?3
billion was from changes in the balance sheet. Why do you think they
are retaining the dividend? Well, I think the dividend is something that
is fairly sacrosanct at BP and they want to be able to distribute cash
to shareholders, the owners of their business. The dividend is in 2016
going to be kind of a trade-off. There's about ?17 billion, they'll
generate ?20 billion so there is about a $3 billion short fall that
needs to come in through from incremental debt. You wonder going
forward what will the balance be between debt and capital expenditure
in the future and also where its investment is in the long-term
because against its peers, BP has lowest production growth really at
the moment? Yes. That's right. I think really most companies are
expecting that we'll see an increase in oil price from where we are at
today. So I think that really, the safety of the dividend is somewhat
reliant on on improvement in price. BP will invest but their growth is
limited than their peers so they'll have catching up to do. A new Depp
tell Chief Executive was announced yesterday, Lemar McKay, who's been
at BP for some time. Is this the beginning of a succession plan as
far as Bob Dudley is concerned or is it about dealing with the
challenging times? I would tend to lean towards the latter but we don't
really know, this was only announced yesterday afternoon, I imagine
they'll speak about it on today's conference call. He's been at BP for
a long time, perhaps not the right age to be successor to Bob Dudley
given that they are only about two years apart I believe but we'll hear
more about that this afternoon. Thank you so much, Jason Gammel. BP
very much in focus, a big player on the FTSE 100 and the shares down
over 5%. So let's have a look at some of the stories on the BBC live
page in a minute, but you have other stories to come first.
In other news, it's reported Yahoo's boss Marissa Mayer is set to reveal
cost-cutting plans that include slashing 15% of its workforce -
that's roughly 1,600 jobs, and closing some business units.
Plans could be announced after Yahoo's fourth-quarter
WhatsApp has hit the billion user mark. The number of people using it
has more than doubled since Facebook bought it in 2014.
Russia is lining up major state companies including Aeroflot,
diamond miner Alrosa and Rosneft, for potential privatisation
as the country looks for options to recoup revenues lost
The latest slide in crude prices is expected to drive Russia
into a second year of recession and has ripped a gaping hole
One story I would like to mention is national Australia Bank for some
time's been talking about trying to change its business and part of that
has been the demerger of Clydesdale bank. It would seem that that
demerger is off or at least the floatation is delayed for now.
Because of a credit rating query. That is the story that's broken in
the last hour which would effect many, many of you who're customers
with Clydesdale bank so keep an eye on that story. More on that on the
business live page. Sainsbury's have made an offer for
Home Retail Group who own Argos. A previous offer was rejected. We know
a deal is now going through. The jury is still out as to whether this
is a good deal. A lot more information on that as well on the
business live, as well as BP, the news we have just had out later in
the programme. We have Kamal Ahmed joining us shortly.
Let's take a look round the world at what business stories
And profits at games maker Nintendo have fallen 36% because of a lack
What is the latest? If you love playing video games, Nintendo is
famous for Super Mario and Splatoon and the like. The profits fell by
36% in the most recent quarter, the three months to December. The figure
came in at $241 million, below analyst estimates. The reason really
is because they need more hit titles, more games, software that
will sell their hardware, so we saw lower holiday sales of the Nintendo
Wii and the 3DS because people are not snapping up titles like they
used to. That said, it's a big year for the company. Nintendo is looking
for a new growth driver so there'll be a big shake-up of the company,
the biggest since 1970. So next month we are going to see the debut
of its first smartphone game call. It's also developing a new console
and there may be more on virtual reality. Investors were not
expecting too much because the shares fell about 1.5% in Tokyo
ahead of the afoundsment. Let's stay in the region
because Asian shares fell on Tuesday as crude oil extended it's heavy
losses from the previous session on continued oversupply fears,
hitting Asia's beleaguered energy stocks as most regional markets
retreated from a recent rally. Weak factory data from China
to the United States also added to the selling pressure,
although Shanghai and Hong Kong did Japan's Nikkei ended down 0.6%
as investors locked in profits after two straight days of big gains
following the Bank of Japan's surprise decision to introduce
negative interest rates In Europe all the major indexes have
followed Asia in opening lower. Alphabet, the company which owns
the search engine Google, has now overtaken Apple
to become the world's most Here's Nadia Tawfik to tell us more
on this and what's making the business world in
the United States today. Alphabet is $568 billion, so
surpassing Apple. If you look at the report, it was very much in line
with what investors expected. The revenue was up around 17% for the
quarter, off the back of its core Google business really and the
strength there with mobile ads and YouTube ads. So that was to be
expected. What we were looking for in this report is how the other part
of Alphabet, this new company with its other bets, other ventures which
are more ambitious, how that was affecting the overall revenue and
outlook of the company. Joining us at the markets
and the stories in the news He's the Chief Executive
for Nutmeg Investment Management. The first overnight results coming
through from Iowa. Quite interesting wasn't it? Absolutely fascinating.
We had so much last night, the transfer deadline day in the
football, the American election going on. And all this wonderful
economic and markets news as well, so for nerd like me it was just a
dream. You didn't sleep? Not at all. This story has three pillars to it.
The first one is that Ted Cruz is a really serious candidate and he's
come out having won the Iowa vote with a large share, about 28% of the
voters. Everybody thought that Trump would be the man because so many
first-time voters turned out. Not in Iowa though, because it's a kind of
Ted Cruz battleground, he was expecting to do well in this one? He
put so much effort into Iowa so if he hadn't won it would have been a
disaster. We saw the rise of Marco Rubio and I learnt that Iowa's one
of, if not the only state which has proportional voting, so the others
are all absolute, but in Iowa, Ted Cruz will get six votes, Trump will
get five and Rubio will as well, so they're almost tied.
Interesting that Hillary Clinton and Bernie Sanders are neck and neck?
Oh, and we don't know which way that is going to go. A couple of years
ago Romney was declared the winner, then Rick Santorum turned out to be
the winner. Amazingly close there. Really strong evangelical support.
Let's look at the Financial Times because this story here about a
spate of privatisations, a real reversal of what we have seen over
the course of Putin's decade and a half of rule in Russia where we have
seen a sort of maybe perhaps not straightforward nationalisation of a
lot of businesses but we have seen a decline in the sell off of shares of
a lot of the companies there? There's two reasons for that. One is
the sales in the early '90s which created the oligarch culture or the
few people, you know, the public have really rebelled against that,
there's been a big push back from the Russian population and Putin
recognises that. He doesn't want to make the same mistakes again. They
have to do something because of the hit the Russian economy is taking
with the oil prices? It's absolutely huge, the hole they have in their
budget. They are going to cut 10% of Government spending this year and
again, he's just asked his counterpart to say, please cut
another 5% 2010% off, can you imagine cutting 20% off the national
budget? ! The question is, could they sell anything in good value
because lots of their assets are energy based and now would be the
time to sell. Thank you very much.
Putinisation is what some are calling it on social media, as
opposed to privatisation. Icelandair looks
to freeze out the competition by offering the company's staff
including pilots and even the Chief Executive as personal tour
guides during transatlantic You're with Business
Live from BBC News. Sainsbury's has offered ?1.3 billion
to win control of Argos He is up north. Ben, tell us more.
Good morning girls. That's right, ?1.3 billion is what is on the
table. The deal is not yet a done deal. It just simply buys
Sainsbury's a little bit more time. They have agreed in principle this
cash and shares offer for Home Retail Group which owns the
retailer, Argos. They have got until 23rd February to finalise the deal.
You will know today is what we call put up or shut up dayment they had
to make a revised bid or walk away. The details of the revised bid is a
63% premium on the closing price of those Home Retail shares in January.
A deal they were holding out for, you will know they originally made
an offer that valued the firm at ?1 billion, but it was rejected in
November. Details of that only coming to light just recently. So
this is a revised offer, a higher offer, one worth ?1.3 billion.
Sainsbury's deciding to put up then. Are job cuts at Argos inevitable, do
we think? What you look at in the detail is what it means for areas or
towns or cities across the country that have both a Sainsbury's and an
Argos in close proximity. Sainsbury's says it expects to shut
a third of stores if they are close together and that is part of its
efforts to try and cut costs. It says it wants to save ?120 million
by rationalising the business. It means putting concessions from Argos
in a Sainsbury's store. That's inevitable and it is trying to
remove the overlap. The big question of why Sainsbury's is interested in
Argos. It comes down to the infrastructure that Argos has in
place. It is known as a retailer where you can get this stuff. Argos
spent a lot of money building the infrastructure to make sure people
are able to get deliveries quickly and that's something that
Sainsbury's wants. Ben, it is really good it check-in with you. Ben
Thompson there. He will be back tomorrow. This is Stelios, he has
launched an online grocery shop. You're watching Business Live.
Our top story: Underlying fourth-quarter profits
fell to $196 million, compared with $2.2 billion
for the same period Despite the poor results
the firm says its dividends Let's get the inside track
on what it takes to make a breakthrough in the competitive
world of Air travel. Icelandair is an Islandic airline
which operated out of 39 cities In recent years the airline has
grown considerably and this year they hope to transport 3.5 million
passengers that's 500,000 more One of the reasons for that growth
is Iceland's geographical location. Icelandair is able to offer low cost
one-stop transatlantic flights to passengers from other
countries in Europe The company now wants to build
on this success and is offering passengers on transatlantic routes
the option to stay in Iceland for up to seven nights at no
additional airfare cost. As a bit of a sweetener the firm
also says it will allow customers to use the company's staff including
pilots and even the Chief Executive as a personal tour guide
during their stopovers. With me is Birkir Holm Gounason,
Chief Executive for Icelandair. Welcome. Thank you. Let's talk about
this new buddy stop over idea that you're launching today. How will it
work? Basically, we have been offering a
stopover in Iceland since the 60s so people have the option to stay up to
seven nights on the way to North America or on the way back. Today we
are launching a service where staff will be a stopover buddy for one day
and I will be one of the buddies and we're going to take the passengers
around Iceland, show them our favourite places, locations and
restaurants and activities. Why do you want to introduce this? Do you
think Iceland is a country that's difficult to navigate as a tourist?
The general travel trend is changing. We did a survey among
11,000 tourists and people would like to spend more time with the
locals and the local culture instead of going to big tourist attractions.
So we believe the Airbnb and if you go to your friends you get to see
more interesting places. You know where to stay, where to eat, so we
want to be friendly. We are friendly, but we would like to show
it! But for those who are trying to get
from say London to a part of the United States, will look at going
via Iceland or via somewhere else to really reduce their costs? Yeah,
exactly. They are going to basically cut their air fare in half and go
via another destination. They don't necessarily want to stay for seven
days, they want to get on to cfl and crack on with their holiday there.
What makes you think it will be successful? The stopover project
increased 60% if recent years. A lot of people like to take a stopover in
Iceland because you don't have to pay anything additional in the air
fare. People go to the Will you Lagoon and all that. In our survey
and for the UK market, almost 70% of the people said they were
embarrassed they look liked a tourist. 23% said... No one wants to
look like a tourist, do they? 23% said they would rather like to
experience the local cultures, instead of going to the big tourist
attractions and 46% said that they would like to mix with the locals.
So I think this is something the travel trends are changing and
people if you look at Airbnb, house exchanges, people like to be around
the locals. A really interesting idea. It is. We shall watch to see
if it is successful or not. Thank you for coming. Thank you. And
telling us all about that. Let's take a closer look at a couple
of the bigger stories we have been Russian is lining up several
companies for potential privatisation as the Government
looks to compensate for the low price of oil. The New York Times is
reporting that Ted Cruz won the Iowa caucuses.
EasyJet airline founder Stelios has opened a trial Easyfood shop with
groceries sold at the knockdown price for 25 pence. I'm sure I can
pick up veg for 25 pence already. It is all orange inside as well!
Both BP and Alphabet have their results out and it's fair
to say they are at opposite ends on the spectrum.
Nice to see you, Kamal. It is such a busy day. I feel like I'm having to
catch my breath here. Do you want to start with BP and give us your
thoughts on that? BP, a really interesting business, clearly hugely
affected by the oil price. It has fallen 40% in the last year. If you
imagine an oil company, it is made out of two big drivers, oil
production, North Sea, Gulf of Mexico, exploration, that's
obviously been hit by the oil price drop. And it means that that is
really struggling now and fell to a loss in the final three months of
2015, compared to 2014, the second part of the business is downstream,
that's the refining, the selling of fuel to retail customers, that is
also struggling because the global slowdown has meant there is less
demand for refined products, it is losing more jobs in the downstream,
so these two engines are both spluttering and that's the problem.
The big message from Bob Dudley the Chief Executive has been this
morning, we will commit to the dividend. So at least investors and
savers and pension funds from around the world will be heaving a sigh of
relief. I was going to ask you about that. Many people are asking the
question, about the dividend can they really continue with that given
their financial situation? Well, obviously making a loss in parts of
your business is unsustainable. When I spoke to Bob Dudley two weeks ago,
he said that the oil price he thought would rise towards the end
of the year. He made a big bet that that would be the case, because cost
efficiencies, job cuts, taking on new debt, can only last for so long.
Otherwise, there will have to be another radical slimming of the
business. Quickly, Kamal, Alphabet, Google's parent company surpassing
Google as the world's most valuable company? Spectacular. A company that
has diversified in sharp contrast to Apple. Apple focussed on two or
three well done products. Google, android mobile, research, people are
using those things and they are highly, highly profitable. Thank
you, Kamal. So much more analysis online.
Thanks for your company. More Business Live tomorrow. Bye-bye.
Hello there. Storm Henry it starting to pull away from the UK now. This
wet weather front will bring