Shell subsidiary in 925m pounds foreign exchange loss

A Japanese subsidiary of Royal Dutch Shell, the Anglo- Dutch oil giant, made a 160bn yen ( pounds 925m) loss on a foreign exchange contract, writes Tom Stevenson.

A spokesman for Shell said the group's after-tax exposure to the loss amounted to pounds 131m, which will be taken as a charge against Thursday's full-year figures.

Shell said it 'viewed the matter with concern and supported actions to ensure that such a situation will not occur again'.

Showa Shell Sekiyu, which is listed on the Tokyo stock exchange, had contracted to buy dollars 6.4bn on the basis of Y145 to the dollar. Since the contract was taken out, the dollar had weakened to Y119.

Shell, which owns 50 per cent of the company, had intended to announce the loss on Thursday. But Showa held a press conference in Tokyo on Saturday.

Shell's figures, which are expected to show a 26 per cent rise in historical cost net income to pounds 3.02bn, will be protected from the currency charge by a pounds 149m credit due to a change in the accounting treatment of Showa.