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Home | News |Shell warns of big decline in fourth-quarter group profits
Shell warns of big decline in fourth-quarter group profits
Updated: 2016-01-25 13:16 Source: Market Report Company share:

Royal Dutch Shell says that it expects fourth-quarter 2015 group earnings on a current cost of supplies (CCS) basis excluding exceptional items to be USD1.6-1.9 billion, as per company's press release.

The estimate represents a year-on-year decline of at least 40% and is below analyst expectations. The announcement follows a continued slump in oil prices. Brent crude has fallen below USD30/bbl this week and almost reached USD27/bbl today.

Ben van Beurden, chief executive of the Anglo-Dutch oil major, ahead of a shareholder vote on its proposed ?36bn bid for rival BG Group, said he was "pleased with Shell’s operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness".

Shell’s drive to improve competitive performance is delivering at the bottom line. Operating costs have reduced by USD4 billion, or around 10 per cent in 2015, and the company expects Shell’s costs to fall again in 2016, by a further USD3 billion. Synergies from the BG combination will be in addition to that.

Together, as it has previously outlined, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue.

He reiterated plans by Shell to reduce capital spending by 20 per cent from 2014 levels to USD29bn last year and indicated the spending for the enlarged company would be USD33bn in 2016, a reduction of about 45 per cent in combined spending, which peaked in 2013.

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