Royal Dutch Shell plans to cut 5,000 jobs as part of cost-cutting to mitigate the impact of the falling oil price.
Shell announced the proposal yesterday alongside third-quarter results showing that profits are down 73 per cent. While they came in far below last year's $10.9bn (£6.6bn), profits for this year's third quarter, at $2.99bn, nonetheless beat analysts' predictions.
The oil price has recovered considerably this year and is currently hovering around the $75 per barrel mark, compared with not much more than $30 in January. But Shell's outlook is still bleak, and although the dividend will rise 5 per cent to $0.42 per share – taking the total payout for the quarter to $2.7bn – the company warned it could yet be frozen next year.
Peter Voser, the chief executive, said: "We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery.
"Despite Shell's good operating performance in this difficult environment, we have embarked on an ambitious programme of stringent measures to further improve our performance," he said.
Mr Voser took over from predecessor Jeroen van der Veer in early July, and immediately launched a restructuring programme in an effort to simplify the business, speed up implementation and cut costs.
In the first nine months of the year, Shell saved $1bn, excluding the effect of exchange-rate fluctuations and non-cash pension costs – reduced by the recent equity markets upturn. The first phase of the restructuring plan cut 150 out of some 600 senior management posts. Most of the redundancies revealed yesterday, which will affect around 10 per cent of the group's 50,000 staff, will be in the UK, US and the Netherlands.
The cost of the programme is likely to add several hundred million dollars to the company's fourth-quarter charges, Shell acknowledged at its results announcement yesterday.
Despite the difficult economic circumstances, several oil and gas majors have reported results this week that came in better than expected.
At BP, the cost-cutting plan is going so well that it aims to hit a newly raised target of $4bn in savings by the end of this year. And profits, while down 50 per cent year on year, beat forecasts by $1.5bn. BG's 44 per cent drop in profits, to £484m, also beat expectations.