‘DREADFUL’: CEO says poor performance requires cuts, major restructuring.

Anchorage Daily News
September 26, 2007

http://www.adn.com/money/industries/oil/story/9332511p-9247583c.html

BP shares drop on warning of bad quarter

The Associated Press
Published: September 26, 2007
Last Modified: September 26, 2007 at 05:21 AM

LONDON — Shares in BP fell Tuesday after a newspaper reported that the oil company’s chief executive had warned staff of poor third-quarter results.

The Financial Times said CEO Tony Hayward told a staff meeting in Houston that he planned a shake-up of the company’s structure after its worst financial performance in 15 years.

The newspaper quoted Hayward as telling the staff that third-quarter revenues, due to be announced Oct. 23, will be “dreadful” and that BP needs to streamline its overly complicated structure.

“There is massive duplication and lack of clarity of who does what,” the newspaper quoted Hayward as saying. “We will reduce the number of organization units. (We) will reduce the number of layers from the workers up to the CEO from 11 to about seven.”

BP confirmed the staff meeting had taken place but said Hayward’s comments had focused on operating performance rather than a major hit to revenue.

The company would not confirm it is planning to restructure. But Hayward said in July that he was “determined to fix” BP’s operational performance, simplifying the company’s organization and cutting head office work force.

BP shares dropped 2.5 percent to 574.5 pence, or $11.55, on the London Stock Exchange.

Hayward succeeded John Browne as BP’s chief executive on May 1. The company is still struggling to recover from a series of high-profile mishaps including a deadly refinery blast in Texas in 2005 and an oil spill in Alaska that contributed to Browne’s departure.

Hayward blamed the company’s poor performance on lost revenue from its Texas City and Whiting refineries in the United States, which are not running at full capacity, and from large production projects that haven’t yet started operation, the newspaper said.

~ by fredfelleman on September 26, 2007.

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