Royal Dutch Shell issues shock profit warning
Shell dropped a bombshell on investors after warning that fourth quarter profit will be "significantly" lower than last year, blaming low production, high exploration costs and continuing problems with refining.
Declaring that this "was not what I expect from Shell", the company’s new boss, Ben van Beurden, forecast that profits for the final quarter would come in at just $2.2 billion (£1.3 billion), less than a third of its $7.3 billion surplus a year earlier. Analysts had been expecting profits of around $4 billion.
Profits for 2013 as a whole are now forecast to fall by about 38 per cent to $16.8 billion, Europe’s largest oil company said. Shell's shares fell by 72p, or about 3 per cent, to 2234p, wiping some £6.5 billion off its market value.
Van Beurden, who took the reins from Peter Voser just two weeks ago, said: “Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”
He blamed the low production volumes on the high level of maintenance required over the period and continuing security problems in Nigeria, while the downstream division suffered from increased competition from new super-refineries in Asia. Shell said it would take a $700 million charge related to its exploration and production activities.
“It’s not good. When you’re talking about higher costs and lower production volumes, it’s a lethal combination,” said Nick Xanders, who heads European equity strategy at BTIG, the trading and brokerage firm. “It’s symptomatic of the entire market, with costs rising but revenues not coming through. Some hope that it’s a company thing, but I don’t think it is.”
Shell said it was continuing to make a loss in the US, where the shale gas boom has dragged down prices. Falling oil and gas prices and the weakening Australian dollar also played a part in the profit decline, the company said.
Shell’s announcement continues a string of disappointments over the past year. Earlier this week, it revealed plans to sell off some of its North Sea oilfield investments, and last year it began selling off interests in the US shale gas industry. Also, last month, it cancelled a $20 billion project to build a gas processing plant in Louisiana.
Shell will announce full-year results on January 30. It said it expects its upstream production division to have made a $2.5 billion profit in the fourth quarter, down from $4.4 billion a year earlier. Profit at its downstream unit is expected to have fallen from $1.2 billion to $0.5 billion.
Sales of the tablet are set to fall again, say analysts
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Parties threaten resort's image as a family destination
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
- 3 Are you ready for Crazy Doritos, the red-hot snack food craze sweeping Mexico’s streets?
- 4 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 5 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Isis in Kobani: US resupplies Kurdish fighters by plane - then Turkey allows reinforcements through its border
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...