The new CEO of BP (BP) says that the next quarter will be "dreadful". According to the FT, results could be the worst the company has posted since 1992-1993.
Margins in the company’s refining and natural gas businesses are bad. The company still has problems with regulators and prosecutors over a spill from BP’s Alaska pipeline and a deadly explosion at one of its Texas refineries.
But, the main reason that BP’s news CEO gives for the company’s trouble is "excessive complexity" in the management structure. The company has too many divisions, which makes it hard to manage. The whole place needs to be reorganized and simplified.
Big reorganizations give new management that chance to blame predecessors and avoid operational problems that are usually at the heart of poor financial performance. BP could point to badly run divisions and simply say that they need to be fixed. Instead, the company is going to be reworked.
Never a good sign.
Douglas A. McIntyre
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