Shell says outlook uncertain as profits slump 62 pct
The global economic slump and weak oil prices cause net profit for the third quarter to drop to EUR 2.21 billion.London – Energy giant Royal Dutch Shell said Thursday that third-quarter net profit slumped 62 percent from a year earlier to USD 3.25 billion (EUR 2.21 billion) due to weak oil prices.
The figure, for the three months to September, compared with USD 8.45 billion in the same period of 2008 -- when oil reached record peaks above USD 147 per barrel.
"Our third quarter results were affected by the weak global economy," said Shell Chief Executive Peter Voser in a results statement, adding that 5,000 jobs will be axed by the end of 2009 in a cost-cutting programme announced earlier this year.
"We see some indications that energy demand and pricing are improving but the outlook remains very uncertain and we are not expecting a quick recovery," he said.
"Our strategy remains on track, although the near-term industry outlook remains challenging."
The company said that oil and gas production was flat at 2.93 million barrels of oil equivalent per day. Revenues tumbled 43 percent to USD 75.01 billion.
The oil sector reaped massive profits early 2008 as oil prices rocketed to record heights before falling sharply by the end of 2008 as the global economic slump ravaged demand.
In recent weeks, they have soared to one-year highs around USD 82 on hopes the economy will recover steadily but the market remains volatile.
Earlier this week, Shell's rival BP reported that its third-quarter net profit sank 34 percent to USD 5.34 billion, also hit by lower oil prices amid the downturn.
Shell has sought to implement a major cost-cutting programme as it fights back against the downturn.
"We continue to focus on improving our competitive cost position," Voser said.
"The Transition 2009 programme ... is progressing well and will be completed by the end of 2009.
"Some 5,000 employees are leaving Shell as a result of these changes. This represents a 10 percent reduction in employees in the redesigned divisions."
He added: "We have reduced operating costs by some USD 1.0 billion in the first nine months of 2009 compared with the same period in 2008."
Royal Dutch Shell employs around 102,000 staff across the globe.
AFP / Expatica