Newspaper article The Evening Standard (London, England)

BP Boss Cheers the City with Promise to Deliver

Newspaper article The Evening Standard (London, England)

BP Boss Cheers the City with Promise to Deliver

Article excerpt


BP chief executive Tony Hayward cut a dash in the City last night at a meeting with brokers where he outlined his commitment to providing shareholders with a strong return on their investment.

According to brokers who attended the meeting, Hayward said it is "all about dividend" these days, otherwise "he gets fired".

It has been described by Charles Stanley as one of the most bullish, upbeat meetings the City has had with a chief executive of BP in years. The broker says the oil giant is one of those good quality, high-yielding companies caught up by the stresses in the market and should be bought. BP shares responded with a rise of 30?p to 449p, where they yield around 6%.

Charles Stanley says: "It sounds like there will be material progress on the downstream that is becoming the recovery cash cow for the group and, at the same time, the cashflows will be very strong".

BP made the point that the dividend is geared to earnings per share and they still look good, even with oil at $40 a barrel, which seems an unlikely price when the Saudis are ready to support a price of between $75 and $80. But with that comes reassurance about balance sheet quality. The supply side remains weak so the imbalance in oil is small and the Saudis control the marginal supply.

Hayward was reported as saying: "This is a chief executive that gets what the market requires and I want to buy a lot of this cash, recovery and a ridiculous prospective yield of 8% with a balance sheet as strong as any. This is also a chief executive who will get rerated too buy a lot of this for a 25% uplift." Hayward also impressed onlookers with the comment: "I pay taxes, so I don't go to jail; I pay dividends, so I don't get fired; and I pay for capital expenditure with what's left ie huge flexibility on cash and earnings to maintain dividend growth." Shares generally managed to extend yesterday's rally, with investors cheered by the Government's rescue of the banks from the edge of disaster. …

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