BP profit slumps 57 percent

LONDON, England (CNN) -- BP, the world's third-largest publicly traded oil company, said on Tuesday first-quarter profit tumbled 57 percent amid the worst refining slump in a decade.

Net income, excluding items, fell to $1.58 billion in the three months to March 31 from $3.7 billion a year earlier. Earnings per share was 7.06 cents compared to 16.51 cents in the first quarter of 2001.

The results were in line with analysts expectations, sending its stock up 3.2 percent to 587 pence in midday London trading on Tuesday.

BP, along with other major oil and gas companies, has been hit by falling prices as U.S. demand for heating oil slowed amid one of the country's mildest winters. Exxon Mobil, the biggest oil company, said last week earning dropped 58 percent.

"Both refining and marketing felt the effects of the poorest trading environment seen for a decade and chemicals margins remain depressed," Chief Executive John Browne said.

Refining margins – the difference between the cost of crude and the selling price of by-products -- were down about 60 percent worldwide versus the first quarter of 2001 with significant drops in Europe and the U.S where the majority of BP's refineries are located, the company said.

Profits at BP's refining and marketing business, which includes the ownership of 5,300 petrol stations worldwide, slumped to $287 million in the first quarter from $994 million a year ago.

Analysts had refined their forecasts for both BP and rival Shell in the wake Exxon numbers but the BP's profit numbers beat the pre-Exxon forecast.

"These are robust numbers in what was one of the most difficult sets of operating conditions that the sector has seen in years,'' Andrew Archer, analyst at the Bank of America Securities, told Reuters. "To come in at the top end of the range is very encouraging.''

But 80 percent of BP's profit comes from oil and gas production, where the company has promised to boost production growth by 5.5 percent this year. Production of oil and gas grew just 0.75 percent from the year ago quarter.

The London-based company said its was on "track" to meet its growth target.