Earnings

Earnings 2021-2020

Segment earnings in 2021 were $2,664 million, 639% higher than in 2020. Earnings in 2021 included a net charge of $1,280 million, compared with a net charge of $6,489 million in 2020 which is described at the end of this section.

Excluding the impact of the net charges (described below), earnings in 2021 were $3,944 million, compared with $5,995 million in 2020. Marketing accounted for 106% of these 2021 earnings, Refining for (36)% and Trading and Supply for 30%.

Oil Products earnings, excluding the net charge, decreased by $2,051 million, or 34% compared with 2020. This was driven by lower contributions from trading and optimisation (around $1,100 million), higher operating expenses (around $1,000 million) and other items, mainly unfavourable deferred tax movements (around $1,100 million), partly offset by higher Marketing volumes (around $700 million) and higher Oil Sands margins (around $500 million).

The decrease in earnings of $2,051 million, analysed by sub-segment, was as follows:

• Marketing earnings were $379 million lower than in 2020, mainly driven by higher operating expenses. These were partially offset by higher sales volumes.
• Refining and trading earnings were $1,671 million lower than in 2020, mainly because of lower contributions from trading and optimisation, higher operating expenses and unfavourable deferred tax movements. These were partly offset by higher refining margins, higher Oil Sands margins due to increased average realised prices and lower depreciation.

Segment earnings in 2021 included a net charge of $1,280 million.

This included:

• impairment charges of $1,619 million mainly related to the divestment of Puget Sound and Deer Park refineries in the USA;
• redundancy and restructuring costs of $62 million (mainly the cost of Reshape 2020-2021, partly offset by Bukom transformation provision release); and
• other net charges of $32 million;

These charges were partly offset by:

• net gains from disposal of assets of $291 million mainly related to the dilution of interest in the Raízen joint venture; and
• a net gain of $142 million due to the fair value accounting of commodity derivatives.

Segment earnings in 2020 included a net charge of $6,489 million.

This included:

• impairment charges of $5,530 million across sites, reflecting revisions to medium- and long-term price outlook assumptions in light of: changes in supply and demand fundamentals in the energy market; macroeconomic conditions; the COVID-19 pandemic; impairment and transformation charges at Pulau Bukom; and the shutdown of Convent;
• restructuring costs of $365 million (mainly shutdown of Convent, Pulau Bukom transformation and various initiatives across Oil Products);
• other net charges of $552 million (mainly onerous contract provisions due to shutdown of Convent); and
• a net charge of $101 million due to the fair value accounting of commodity derivatives.

These charges were partly offset by net gains from disposal of assets of $59 million.

Prior year earnings summary

Our earnings summary for the financial year ended December 31, 2020, compared with the financial year ended December 31, 2019, can be found in the Annual Report and Accounts and Form 20-F (page 52) for the year ended December 31, 2020, as filed with the Registrar of Companies for England and Wales and the US Securities and Exchange Commission, respectively.