Shell profits plunge to 13-year low but it’s upbeat on BG linkComments Off on Shell profits plunge to 13-year low but it’s upbeat on BG link
Shell became the latest victim of the crashing oil price today, reporting an 80% slump in profits to a 13-year low.
Two days after BP announced its biggest-ever annual loss, arch-rival Shell revealed that its profits tumbled to $3.8 billion (£2.6 billion) last year from $19 billion in 2014.
The industry has been rocked by a sustained slump in the oil price, which has plummeted from $115 a barrel in the summer of 2014 to $35.41 today.
Despite the slump, Shell chief executive Ben van Beurden said he was optimistic about the future for the company after its $47 billion takeover of rival BG Group 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,” van Beurden said. “We are making substantial changes in the company, reorganising our upstream [production] and reducing costs and capital investment as we refocus Shell, and respond to lower oil prices,” he added.
Shares in Shell rallied, rising by 64p, or 5%, to 1500p, as van Beurden held the annual dividend at $1.88 for 2015 and said it is “expected to be at least $1.88 per share in 2016” and promised to keep a firm handle on costs.
Shell’s full-year profits were hit by $6.8 billion of one-off costs including writedowns relating to the declining value of its oil and gas assets and redundancies.
Shell also reported fourth-quarter profits of $1.8 billion, down from $4.2 billion the year before.
The company’s results come two days after BP reported a $6.5 billion loss for 2015 and announced a further 3000 jobs would be cut worldwide, at its “downstream” refinery.
BP boss Bob Dudley warned that this year is “also going to be tough” as he announced the loss.
Shell said it completed the sale of 185 service stations across the UK to independent dealers, who will all retain the Shell brand and sell its fuels.
Last week, shareholders 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 be completed by February 15.
Not all investors are convinced of the benefits of the deal, which they argue is too expensive since the price of oil has slumped since it was struck last year.