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BP swung back to a small profit in the third quarter but warned the pace of recovery from the pandemic remains uncertain and continued to weigh on fuel demand and refining profits.

The London-based company said that while fuel demand in Asia, particularly in China, was recovering, global consumption remained weak so far in the fourth quarter.

BP’s shares are down more than 50% this year and remain near 25-year lows, battered by weak oil prices and investor concerns about BP’s ability to successfully shift to renewable energy from fossil fuels.

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The coronavirus crisis will however not slow BP’s transition plans, Chief Financial Officer Murray Auchincloss told Reuters.

“It is hard to imagine the environment being much more brutal than it was in the third quarter,” Auchincloss said, even if the fourth quarter “is not materially different.”

BP reported a $86 million underlying replacement cost profit, the company’s definition of net income, for the three months to Sept. 30, beating analysts' expectations of a loss of $120 million. It followed a record $6.7 billion loss in the previous quarter, when it also halved its dividend.

Weak fuel demand continued to weigh on refining profit margins, with BP refineries operating at 80% of capacity, Auchincloss added. Fuel demand remains around 15% below pre-crisis levels.

BP’s refining margin of $6.20 per barrel was up slightly from the previous quarter but less than half of what it was a year earlier.

The results were boosted by higher oil prices and stronger natural gas trading results, though oil trading was “significantly lower” than the previous quarter, BP said.

Refining and trading typically help offset weak oil and gas prices. But BP and its peers hit a perfect storm this year when the coronavirus epidemic led to both sharp drops in oil and gas prices and fuel demand.

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“Despite the difficult macro backdrop, this was a strong underlying performance from BP,” Credit Suisse analyst Thomas Adolff said in a note.

BP expects to be resume buybacks in the fourth quarter of next year at the earliest, CFO Auchincloss said.

BP shares were up 1.65% by 1018 GMT.

RESTRUCTURING

BP plans to increase its renewable power capacity 20-fold by 2030 while reducing its oil output by 40% and diverting more funds to low-carbon investments.

The London-based company also plans to lay off around 10,000 employees, or roughly 15% of its global workforce at a cost of around $1.4 billion spread over the next few quarters.

But investors have welcomed the new strategy cautiously amid concerns that BP’s won’t be able to hit its targeted profit margins in the transition.

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BP slightly reduced its debt in the quarter and said it expected a further decline in the fourth quarter as a result of asset sales.

Its debt-to-equity ratio, or gearing, including leases, was 37.7% at the end of September, flat on the quarter and up from 35.9% a year ago.

Rivals including Royal Dutch Shell and Exxon Mobil have also seen their market values fall in recent months. They will report later this week.

“It is difficult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of COVID-19 will be,” BP said.

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