FTSE 100 oil major BP (LON:BP) has reported a drop in profits in the first quarter as the lower oil price and a sharp reduction in demand due to coronavirus takes it’s toll.

BP’s Q1 underlying replacement cost profit fell to $0.8bn, down from $2.4bn in the same period a year ago.

The confirmation of such a large drop in profit barely moved the share price as the market has seemingly priced in the recent negative impact of the COVID-19 crisis to BP shares.

BP shares were softer by 1.59% to 309p in mid morning trade on Tuesday and are down 34% year-to-date.

Looking forward to the second quarter, investors should be prepared for a significant impact due to the lower price of oil. In the first quarter, BP recorded an averaage oil price of $47.47 per barrel, down from $55.90 in the fourth quarter of 2019.

With oil trading around $20 for much of the second quarter, which started 1st April, BP are likely to record a much lower oil price in the next trading update.

Despite the sharp reduction in profitability, BP have maintained their dividend of 10.5 cent which is due to be paid 19th June.

The maintenance of the dividend was helped in large part by BP’s strong cash position. BP had $32bn in liquid assets at the end if the quarter.

BP CEO, Bernard Looney commented on the results:

“This extraordinary time for the world demands extraordinary responses. And thankfully we are seeing that just about everywhere we look around the world. Our industry has been hit by supply and demand shocks on a scale never seen before, but that is no excuse to turn inward. BP, like many other companies, is stepping up and extending a helping hand to those in need. We do it not because it is expected of us – but because we want to. That is consistent with our purpose.”

“We are focusing our efforts on protecting our people, supporting our communities and strengthening our finances. I am incredibly proud of the work that our people are doing in all three areas, particularly our colleagues in operations – from rigs to
retail and everywhere in between – who are continuing to deliver energy and provide goods in the most difficult of circumstances.”

“At the same time, we are taking decisive actions to strengthen our finances reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower.”

“We are determined to perform with purpose and remain committed to delivering our net zero ambition.”