BG Group trounces analyst expectations

BG Group first quarter numbers have come in well ahead of analyst expectations with a net profit down just 8% year on year from £769 million to £722 million.

The group credited resilience in its natural gas business for outweighing the collapse of oil pricing for the result, in addition to the impact of a devalued pound.

Shares in the company bounced hard on the results, rising 3.90% to £11.19 by 11.00.

Chief executive Frank Chapman said: ‘The strength of BG Group's integrated gas business is reflected in the distinctive resilience of our profits and cash flow in this challenging economic environment. 

‘We have also continued to make progress in key growth areas of our business, with the acquisition of Pure Energy in Australia, continued exploration success in Brazil and the development of projects across the portfolio.’

Net income of £690 million was 13% down on the same period of last year as the resource bubble was inflating but still beat consensus forecasts by a massive 14%.

Weaker liquid natural gas prices were offset by hedging taken in the latter part of 2008, with further uplift from improved realisations and sales diversification.

Evolution Securities analyst Richard Griffith said: BG's Q1 results have proved to be very resilient in a tough trading environment.

‘They have proved that they are capable of protecting their LNG profits, an area where the market has been concerned that BG's “super LNG profits” would be vulnerable to oversupply.

‘While LNG prices have tumbled as demand has shrunk with the global economic slowdown, BG's strategy to hedge and protect its LNG profits has paid off in Q1 and the company has re-affirmed its 2009 and 2010 guidance for the division.’