BP’s ditch output cuts to appease activists

BP (BP.) is set to scrap its pledge to cut oil and gas production, with CEO Murray Auchincloss preparing to announce at least one major asset sale at this week’s investor day. This shift comes as Auchincloss battles to convince activist investor Elliott Management that he can turn the company around. The US hedge fund has taken a near 5% stake in BP, increasing pressure for a “fundamental reset” in strategy.

Beyond production strategy, Elliott is pushing for significant divestments, though it has not specified which assets should go. BP’s options include selling its Castrol lubricants business, spinning off parts of its retail and marketing operations, or listing its US shale unit. There is also speculation around restructuring low-carbon ventures like Lightsource BP. Auchincloss has already demonstrated a preference for a “capital-light” approach by restructuring BP’s offshore wind business, but Elliott may push for more aggressive action.

Centrica seeks government support for rough gas storage expansion

Centrica (CNA) is in discussions with the UK government to secure financial backing for an expansion of the Rough gas storage site in the North Sea. The energy group is pushing for a “cap and floor” arrangement, where revenues would be subsidised if they fall below a set level but capped on the upside. CEO Chris O’Shea described the talks as “constructive,” emphasising that redeveloping the site could help stabilise gas prices and reduce reliance on volatile global markets.

Originally closed in 2017 due to poor returns, Rough was partially reopened in 2022 after Russia’s invasion of Ukraine strained gas supplies. Centrica now wants to invest £2bn to expand the facility and convert it to store hydrogen in the long term, anticipating a growing market for the cleaner fuel. O’Shea highlighted the potential for thousands of skilled jobs and described the site as a “national insurance policy” against energy price spikes. However, Rough was lossmaking in the second half of 2024, and Centrica expects it to remain unprofitable this year.

Beyond gas storage, Centrica remains interested in investing in the Sizewell C nuclear power project, provided the risk-reward balance is favourable. The UK government and EDF are seeking external investors ahead of a final investment decision in June. While a government spokesperson stressed that Rough’s future is a commercial matter for Centrica, they confirmed that discussions on gas storage proposals would continue as long as they deliver value for taxpayers.

Glencore cuts dividend as debt reduction takes priority

Glencore (GLEN) has cut its dividend as it focuses on reducing debt, following a sharp drop in annual earnings. Shareholder payouts were cut to $1.6bn from $7.1bn a year earlier, as the Swiss commodity giant works to finalise its $6.9bn acquisition of Teck Resource’s steelmaking coal division. Adjusted EBITDA tumbled 50% to $17bn, reflecting a return to normalised coal earnings and weak markets for cobalt, nickel, and zinc. The group’s net debt rose to $4.9bn, exceeding analyst expectations of $4bn, pushing its share price to a two-year low.

Despite posting its third-highest profits ever, Glencore is prioritising balance sheet strength over shareholder returns. The company opted against a new share buyback programme and is targeting a net debt reduction to $5bn, which will temporarily rise due to dividends and the Teck acquisition. Nagle suggested that top-up shareholder returns could resume in the future, with the company hinting that the Teck deal could close earlier than expected, no later than Q3 this year.

Glencore’s debt reduction strategy is also paving the way for a major restructuring, with plans to spin off a standalone coal company in the second half of 2026. However, Nagle told analysts that the decision would ultimately be led by shareholders. Meanwhile, the company is pulling back from the struggling nickel market, halting funding for the Koniambo nickel plant in New Caledonia. While acknowledging an oversupply issue driven by Indonesian production, Nagle still sees a long-term role for non-Indonesian nickel producers.

HSBC’s big cost-cutting push

HSBC (HSBA) is making bold moves under new CEO Georges Elhedery, targeting $1.5bn in annual cost savings by the end of next year. The bank plans to shift $1.5bn from “non-strategic activities” to more competitive areas, though these changes come with $1.8bn in upfront costs, including severance. Its restructuring was outlined alongside a strong Q4 earnings report, showing a pre-tax profit of $2.3bn—up $1.3bn year on year.

The overhaul is also making its mark on executive pay. Elhedery’s package could reach £19.8mn if HSBC’s share price jumps 50%, aligning his incentives with shareholders. Despite job cuts, the bank held its $3.8bn bonus pool steady, meaning bigger payouts for those who remain. It’s also continuing its shareholder-friendly approach, announcing a $2bn buyback alongside a fourth interim dividend of 36 cents per share, bringing the 2024 total to 87 cents.

Challenges remain, particularly in Hong Kong’s struggling property market. HSBC’s defaulted commercial real estate loans there have soared to $4.6bn, though Elhedery downplayed the risk. Rising costs and a declining net interest margin—now at 1.56%—add to the pressure to cut spending and grow in areas beyond interest income. Still, with a 6.6% rise in full-year profits to $32.3bn, HSBC is navigating these shifts from a position of strength.

Indivior shares tumble on 2025 outlook

Indivior’s (INDV) share price dropped sharply last week following the release of its full-year 2024 results and guidance for 2025, which painted a more challenging picture for the company’s near-term outlook. While 2024 saw strong revenue growth, particularly in its key SUBLOCADE product, investors reacted negatively to the expectation of a 17% decline in total revenue for 2025. The anticipated drop is largely attributed to intensified generic competition in the U.S. for its SUBOXONE Film, alongside the discontinuation of PERSERIS. This outlook overshadowed the company’s efforts to streamline operations and reinvest in its long-term growth pipeline.

Beyond SUBLOCADE, the sharpest area of concern lies in SUBOXONE Film, where revenue is set to erode by more than 50% in 2025 due to increased generic competition. The company also faces the potential entry of a fifth generic competitor, further compressing margins. Meanwhile, the decision to discontinue PERSERIS marketing efforts removes another revenue stream, contributing to the projected overall revenue decline. These challenges highlight the volatility of Indivior’s revenue mix, with its dependence on a few key products making it particularly vulnerable to shifts in market dynamics.

Despite these hurdles, Indivior remains confident in its strategic direction, emphasising cost-cutting measures that are expected to save over $100 million annually. Half of these savings will be reinvested into the company’s opioid use disorder (OUD) pipeline, supporting both SUBLOCADE’s continued expansion and the development of Phase II assets. While management is optimistic about long-term growth, the market’s immediate reaction suggests investors are skeptical about the company’s ability to navigate near-term pressures. With the share price reacting sharply to the guidance, the coming quarters will be critical in determining whether Indivior can execute its strategy and restore confidence in its growth trajectory.