Shell result disappoints: Oil giants report mixed fortunes in period of continuing volatility - Depressed chemicals show little sign of revival
Net profits rose by 10 per cent to pounds 1.52bn but masked a 6 per cent decline in second-quarter profits to pounds 575m, significantly below market expectations.
The result prompted City analysts to cut their full-year forecasts, with David Stedman, oil analyst at Daiwa Securities, trimming his net profits estimate by pounds 120m to pounds 3.29bn. The shares fell 8.5p to 633p.
Shell was hit by restructuring charges of pounds 183m in chemicals and oil refining and marketing, where it is planning to cut several thousand jobs worldwide this year. The company also incurred pounds 141m currency losses.
The worst performer was its chemicals arm, which slumped into a pounds 173m loss in the first half against a pounds 1m profit. Although the division's US profits jumped from pounds 26m to pounds 63m this was more than offset by a tenfold jump in losses to pounds 236m elsewhere.
The company warned that trading conditions in petrochemicals remained depressed, with only limited signs of recovery.
However, refining and marketing profits improved by a third to pounds 892m due to improved margins and cost- cutting at its US subsidiary.
Helped by higher US gas prices, profits from exploration and production advanced by more than a fifth to pounds 992m. But Shell is taking a cautious view of the oil price. 'Although a modest recovery in oil prices might be expected as demand increases in the second half of the year, the market is likely to remain volatile,' it said.
It is continuing talks over the sale of its US agrochemicals and its worldwide metals mining businesses. Separately the company is also progressing with a planned merger of some of its European petrochemicals businesses with Himont of Italy.
View from City Road, page 24
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