Shell to cut 10,000 jobs as profits plunge by 80 per cent

The company confirmed it is cutting more than 10,000 positions – of which around 7,500 jobs have already gone and a further 2,800 will be lost as a result of the BG deal

Shell yesterday confirmed plans to cut 10,000 jobs now that its takeover of rival BG Group is set to go through, and raised the prospect of further redundancies, as it reported an  80 per cent slump in profits to a 13-year low.

Two days after BP announced its biggest-ever annual loss, Shell revealed that its profits had fallen to $3.8bn (£2.6bn) last year, from $19bn in 2014. The industry has been rocked by a sustained slump in the oil price, from $115 a barrel in the summer of 2014 to $35.41 yesterday. 

However, Shell chief executive Ben van Beurden said he was optimistic about the future for the company after its $47bn takeover of BG cleared the final hurdles last week.

“The completion of the BG transaction marks the start of a new chapter in Shell, rejuvenating the company and improving shareholder returns,” he said. “We are making substantial changes...  reorganising our upstream [production] and reducing costs and capital investment as we refocus Shell, and respond to lower oil prices.” 

The company confirmed it is cutting more than 10,000 positions – of which around 7,500 jobs have already gone and a further 2,800 will be lost as a result of the BG deal.

And while Mr van Beurden said there were no more job cuts planned at the moment, he added that the 2,800 figure was “an estimate at this point”.

“Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that,” he said.

Shares in Shell soared  87.50p or 6 per cent to 1,525.50p, as investors  were encouraged by the cost-cutting plans and questioned whether the share slide may have been overdone. 

They also welcomed Mr van Beurden’s decision to hold the annual dividend at $1.88 for 2015 – and his comment that it is “expected to be at least $1.88 per share in 2016”.

But some analysts questioned how long Shell would be able to hold its dividend at this level, given the low oil price. “There is a high degree of scepticism in the market that Shell can continue to defy [dividend] gravity for the remainder of the year,” said Laith Khalaf at Hargreaves Lansdown.

Shell’s full-year profits were hit by $6.8bn of one-off costs, including write-downs for the declining value of its oil and gas assets, and redundancies.

Shell also reported fourth-quarter profits of $1.8bn, against $4.2bn the year before.

The company’s results came two days after BP reported a $6.5bn loss for 2015 and announced a further 3,000 jobs would be cut worldwide.

Last week, its investors  voted through the takeover of BG by a strong majority, paving the way for the creation of Britain’s largest public company. The deal is expected to complete by 15 February.

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