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BP Gains on Decision to Lay Off 10,000 Global Employees

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Zacks Equity Research
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BP plc BP announced that it will commence a process of reducing its global work force. This time, the energy major has decided to cut headcounts by 10,000 from the workforce of roughly 70,000 across the globe. With the announcement, the stock gained 2.4% on Jun 8.

The British energy major added that in 2020 it will be reducing majority of its workforce. However, people working in the frontline will get protection. Office-based jobs will get affected, said the company. The senior levels will see the maximum job cuts, which will include a reduction of group leaders by more than 30%.

The decision, though tough to take, will significantly strengthen the financials, BP added. The leading integrated energy company also said that it is time to reinvent BP, considering the coronavirus-hit business environment and current financial status. Overall, the broader plan is to make the company smaller and more competitive.

The decision to cut workforce to reduce expenditure comes after the announcement in April to curtail capital spending for 2020 by 25%. The firm decided to lower capital budget as a measure to survive the pandemic, which significantly dented global energy demand.

BP also revealed that currently the company is spending roughly $22 billion every year to maintain operations. Of the total amount, the company spends $8 billion on its workforce. Hence, with the recent decision, the integrated firm believes that it will be able to slash operating cost by $2.5 billion in 2021.

BP p.l.c. Price

BP p.l.c. Price
BP p.l.c. Price

BP p.l.c. price | BP p.l.c. Quote

Currently, BP carries a a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Murphy USA Inc MUSA, Key Energy Services, Inc. KEGX and CNX Resources Corporation CNX. While Murphy and Key Energy sport a Zacks Rank #1 (Strong Buy), CNX Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is likely to see earnings growth of 7% in the next five years.

Key Energy is expected to witness bottom-line growth of 97.2% in 2020.

CNX Resources has witnessed upward estimate revisions for 2020 bottom line in the past 60 days.

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