British energy giant Royal Dutch Shell revealed a 62% net profit slump in the third quarter on Thursday, blaming weak oil prices and warning that the outlook is cloaked in uncertainty.
Quarterly profit amounted to $3,25-billion, compared with $8,45-billion in the same period of 2008 — when oil had struck record peaks above $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 added that oil and gas production was flat at 2,93-million barrels of oil equivalent per day. Revenues tumbled 43% to $75,01-billions.
The oil sector reaped massive profits last year 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 $82 on hopes the economy will recovery steadily but the market remains volatile.
Earlier this week, Shell’s rival BP reported that its third-quarter net profit sank 34% to $5,34-billion, also hit by lower oil prices.
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
“About 5 000 employees are leaving Shell as a result of these changes. This represents a 10% reduction in employees in the redesigned divisions.”
He added: “We have reduced operating costs by some $1,0-billion in the first nine months of 2009 compared with the same period in 2008.”
Shell saw its ‘B’ shares slide 5,46% to 1 767,5 pence as investors digested the results.
London’s FTSE 100 index of leading companies, on which Shell is listed, slid 0,37% to 5 060,92 points.
“Shares are suffering today from investor concerns after the Shell stated it was unlikely that there would be a quick recovery in energy demand,” said analyst Joshua Raymond at spead-betting firm City Index. — AFP