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Annual Results

BG earnings hit by fall in commodity prices

05 February 2016 07:17

BG Group's full year results were hit by lower commodity prices with upstream EBITDA down 35% at $4,167m and LNG EBITDA down 46% at $1,456m.

Revenue and other operating income decreased 16% to $16 419 million, reflecting the significant fall in realised sales prices impacting both the Upstream and LNG Shipping & Marketing segments. The impact of lower prices was partly offset by higher volumes in both segments, the start-up of liquefaction operations at QCLNG and weather-related gains in North America in the LNG Shipping & Marketing segment. E&P production volumes were up 16% and LNG delivered volumes were up 63%. EBIT decreased by $3 948 million to $2 429 million, reflecting the reduction in EBITDA combined with increased DD&A charges, which resulted from higher E&P production volumes and the start-up of QCLNG.

Net finance costs of $260 million included foreign exchange gains of $nil (2014 net finance costs of $109 million included realised foreign exchange hedge gains of $28 million and other foreign exchange gains of $21 million). Excluding the impact of foreign exchange, net finance costs increased by $102 million to $260 million, reflecting the reduction in the amount of interest on borrowings that can be capitalised against assets under construction following the start-up of QCLNG.

The tax charge for the full year reduced to $472 million and reflects the lower profit before tax and the reduction in the Group's full year effective tax rate (excluding BG Group's share of joint ventures and associates' results and tax) to 24.0% (2014 36.9%), and includes the impact of further changes in the Group's mix of profits and revisions to certain tax positions.

Group earnings of $1 697 million and EPS of 49.7 cents both decreased 58%, with the reduction in EBIT and higher net finance costs only partially offset by the reduction in the Group's tax charge.

Chief executive Helge Lund said: "We are pleased to have delivered an excellent operational performance in 2015 with results in line with, or ahead of, our guidance for the year. The ramp up of both LNG trains at our QCLNG project in Australia and the ramp up in Brazil, including the start-up of our sixth FPSO, drove a strong E&P operational performance. Our LNG Shipping & Marketing business delivered 282 cargoes, an increase of 58% on 2014, in difficult market conditions.

"The addition of new low cash cost volumes in Brazil and Australia and delivery of our operating and capital cost savings has helped to partly mitigate the impact of lower commodity prices.

"This strong operational performance is the result of the capability and commitment of our teams across the organisation and we will deliver a high-performing business into the Combination with Shell."

Story provided by StockMarketWire.com

Related Company: BG.

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