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LONDON
Petroleumworld.com, Feb 4, 2010

Energy giant Royal Dutch Shell reported a plunge in annual profits on Thursday, blaming a weak global economy and an uncertain outlook as it axed 1,000 jobs and earmarked more assets for disposal.

Shell said in a statement that net profit tumbled 52 percent to 12.52 billion dollars (9.0 billion euros) last year from 26.28 billion dollars in 2008.

"Our fourth quarter 2009 results were impacted by the weak global economy," Royal Dutch Shell Chief Executive Officer Peter Voser said in the statement.

"Oil prices have increased compared to a year ago but gas prices and refining margins have declined sharply because of weaker demand and high industry inventory levels.

"We are not assuming that there will be a quick recovery and the outlook for 2010 is uncertain," he said.

However, the group bounced back into the black in the three months to December, owing to a major restructuring programme and a modest recovery in crude oil prices.

Fourth quarter net profit stood at 1.96 billion dollars after a heavy loss of 2.81 billion dollars in the same period in 2008 when the global downturn slashed worldwide energy demand.

Fierce rival BP said on Tuesday that it also returned to profit in the fourth quarter, with net earnings of 4.30 billion dollars as it ramped up production and slashed costs.

Shell said on Thursday that its adjusted net profit, which strips out exceptional items and changes to the value of its oil inventories, slumped 75 percent to 1.18 billion dollars in the fourth quarter.

Production slid two percent over the period to 3.33 million barrels of oil equivalent per day.

"For 2010, we are targeting a further underlying cost reduction of at least 1.0 billion dollars and a reduction of some 1,000 employees," Shell said.

"Much of this will come from downstream and ongoing cost initiatives in the corporate functions."

Shell said it axed 5,000 jobs last year as part of a major restructuring which saved more than 2.0 billion dollars.

Voser said the group was positioning itself for "significant growth" in the years ahead.

"We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years."

Shell sold around 1.3 billion dollars of non-core downstream assets in 2009. Asset sales would continue this year, with 15 percent of its refining capacity placed under review.

BP recently overtook Royal Dutch Shell to become Europe's biggest energy group by stock market value.

Story from AFP
AFP 02/04/2010 09:37

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