Record earnings have a hollow ring in a global downturn. BP reported a 39 per cent surge in profits to $25.6bn for the year to December, though plunging oil and gas prices stole its vigour towards the end.

The oil and gas company kept investors sweet, increasing dividends for the year by 22 per cent in dollar terms – though it kept the final quarterly pay-out flat, tempering expectations it will lift the dividend at all this year. That is prudent while the oil price languishes at around $40 a barrel, well below the $50-$60 BP needs to keep up its pace of capital expenditure and dividend pay-outs.

What else is BP doing to hunker down for the storms ahead? Nothing drastic: after all, BP has done much in the past two years to improve its operational efficiency . At the top, it has thrown out a fifth of the stowaways in senior management. Lower down, it will cut another 5,000 jobs this year while hoping that the falling price of steel pipes and other key inputs yields other savings.

Furthermore, capital expenditure is being capped at $20-$22bn, compared with $21.7bn last year. BP is conserving cash, too. After returning $2.9bn to shareholders through buybacks last year, it stopped these in the last quarter. And if the oil price stays below BP’s target range, the company has gearing – net debt to net debt plus equity – of only 21 per cent.

BP is little different from other commodities companies in that this year will be one of restraint – and of hope that commodity prices recover. The difference is that it has more financial wiggle room. Though BP looks well fortified for what lies ahead, shareholders might have valued a greater sense of growth beyond this year. Still, a prospective dividend yield of 8 per cent should keep investors on side for a while.

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