By Ed Crooks and Kate Burgess
Published: October 13 2007 03:00 | Last updated: October 13 2007 03:00
Investors and analysts yesterday welcomed the plan to reshape the structure and corporate culture of BP set out by Tony Hayward, the new chief executive who took over in May.
On Thursday Mr Hayward signalled a radical change from the era of Lord Browne, his predecessor, saying he wanted “a fundamental shift in how BP works”.
Helped by the rise in the price of oil to a new record high yesterday, BP’s shares closed up 25½p at 619p. It was their biggest one-day increase since March 2003.
Robert Talbut, the chief investment officer of Royal London Asset Management, said: “There is a great deal of support for the changes, which are overdue.”
Details of the restructuring plan have not yet been spelt out and will be delivered to staff in the next few months.
Mr Hayward’s strategy includes cutting central support functions and taking out layers of management to reduce the complexity of the organisation and cut “unacceptably high” overhead costs, while raising the efficiency and reliability of the operations.
Colin Smith, an analyst at Dresdner Kleinwort, who made BP his top pick for this year, said: “Tony Hayward was part of the top management team at a time when things were going wrong, and indeed the exploration and production division that he led suffered from problems such as the delays to major projects.
“So there was always going to be a question as to what he was going to do. What this announcement signals is, yes, there is a different agenda, there is a different process.”
One institutional shareholder who did not want to be named said: “This was welcome news and the initial reaction has been really quite positive.
Developments will be watched with interest but it brings to mind similar moments seen at Unilever and Royal Dutch Shell [other companies where restructuring was welcomed by investors].”
Copyright The Financial Times Limited 2007
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