Shell has reported an 87% collapse in annual profits to $1.9bn despite axing thousands of jobs.
The Anglo-Dutch group, which has just won shareholder approval for a $35bn takeover of rival BG, revealed that quarterly earnings fell by 58% to $939m although the underlying profit of $1.8bn was in the middle of expectations.
Shell has been hammered by a collapse in oil prices which left the key North Sea Brent crude as low as $32 in recent days. On Tuesday, BP unveiled the worst annual loss in its history at $6.5bn.
Ben van Beurden, the Shell chief executive, said he was committed to make “substantial changes” to cope with the lower cost of crude.
“The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns,” he said. “We are making substantial changes in the company, reorganising our upstream, and reducing costs and capital investment, as we refocus Shell and respond to lower oil prices.”
The latest figures from Shell show quarterly oil and gas production down 5% and put quarterly cash flow from operating activities at $5.4bn with annual spending at $28.9bn, down 23% on the year before.
Despite the dismal financial results, Van Beurden announced the 2015 annual dividend would be held at $1.88 and “is expected to be at least $1.88 per share in 2016”.
All oil companies have been desperately shedding jobs and exploration spending to help shore up their balance sheets and keep on paying substantial levels of dividend for which they are noted.
Shell, which last year promised to cut 7,500 jobs, said it would crop 2,800 additional jobs and hive off $30bn of assets once it has formally completed the tie-up with BG, which is scheduled for 15 February.
Some shareholders had expressed concern that the merger could undermine Shell’s financial position but Van Beurden insists it will have the opposite effect.
This article was written by Terry Macalister Energy editor, for theguardian.com on Thursday 4th February 2016 08.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010