Net profits improved by 7 per cent to pounds 861m for the three months to 30 September, while profits for the first nine months of the year were up 9 per cent to pounds 2.33bn.
But the results disappointed the market, which had expected net profits of about pounds 900m for the quarter. Shell shares slipped 18p to 704p.
The group incurred a pounds 171m third- quarter charge in chemicals, of which pounds 127m related to US environmental provisions and the balance reflected cost-cutting in Europe, where several thousand jobs are expected to go over the next two years.
The charges, which followed similar action at the half-year, deepened the division's third-quarter loss fourfold to pounds 168m, while the nine-month deficit soared from pounds 40m to pounds 341m.
The company is not ruling out more action to improve efficiency in response to tough market conditions, particularly in Europe. 'We are continuing to look at our operations, and cost-cutting is an on- going process,' it said.
Thanks to higher volumes and margins, Shell's refining and petrol retailing arm boosted profits by 36 per cent to pounds 412m in the third quarter, despite an pounds 80m bill for cost-cutting. Nine-month profits rose by more than a third to pounds 1.3bn.
A pounds 217m release of tax provisions helped the group's oil exploration and production profits to surge by 52 per cent to pounds 558m in the third quarter and by 31 per cent to pounds 1.55bn for the first three quarters.
The tax credits, which partly reflect the benefits of lower petroleum revenue tax levied by the British government, offset a sharp decline in crude oil prices, which fell by dollars 3.50 to an average dollars 16.50 a barrel.
Warburg Securities, the broker, is forecasting an increase in the group's net profits from pounds 3.1bn to pounds 3.3bn for the full year.