Market is braced for cut in BP payout

THE STOCK market is bracing itself for a dividend cut and heavy provisions from British Petroleum this week as David Simon, installed as chief executive following the ousting of Robert Horton in June, clears the decks in a bid to revive the oil giant's fortunes.

Some analysts fear the group will pass its second-quarter dividend, due to be announced on Thursday, and that the full-year payment will be halved from last year's 16.8p. Others, including County NatWest and James Capel, think the payment will be cut from 4.2p to 2.5p.

The City also expects significant asset write-offs and provisions for redundancy and other restructuring costs. Some fear these could be as high as pounds 1bn, which would plunge the group into a first-half loss of more than pounds 750m.

County is forecasting just pounds 50m of provisions, mainly for redundancies. But it warns the group could also write down the value of some assets and make provisions against planned disposals. For example, it is trying to sell its nutrition business, which is in the books at pounds 1bn compared with the pounds 600m it is expected to fetch.

BP's shares closed at 212.5p on Friday compared with a high for the year of 304p.

The banks' interim reporting season also draws to a close this week with figures from National Westminster and Barclays. Both are expected to make further large provisions against bad debts.