Shell Cuts Jobs After Profits Plunge

Will cut 1000 jobs

Royal Dutch Shell plans to axe 1,000 more jobs and sell some of its assets owing to an "uncertain" outlook and after annual profits plunged, the British energy giant said on Feb. 4.

"For 2010, we are targeting a further underlying cost reduction of at least $1 billion and a reduction of some 1,000 employees," the group announced. Shell said it had cut 5,000 jobs last year as part of a major restructuring that saved more than $2 billion.

But the group said it turned a profit in the fourth quarter in response to a major restructuring program and a modest recovery in crude oil prices. Fourth quarter net profit stood at $1.96 billion after a heavy loss of $2.81 billion in the same period in 2008 when the global downturn slashed worldwide energy demand.

For the year net profit tumbled 52% to $12.52 billion compared with $26.28 billion in 2008.

Shell said its adjusted net profit, which strips out exceptional items and changes to the value of its oil inventories, slumped 75% to $1.18 billion in the fourth quarter.

Production slid two percent over the period to 3.33 million barrels of oil equivalent per day.

Shell sold around $1.3 billion of non-core downstream assets in 2009. Asset sales would continue this year, with 15 percent of its refining capacity placed under review.

BP recently overtook Royal Dutch Shell to become Europe's biggest energy group by stock market value.

The group's final quarter of 2009, while profitable, was nonetheless "impacted by the weak global economy," Royal Dutch Shell CEO Peter Voser said. "Oil prices have increased compared to a year ago but gas prices and refining margins have declined sharply because of weaker demand and high industry inventory levels. We are not assuming that there will be a quick recovery and the outlook for 2010 is uncertain."

Voser said the group was positioning itself for "significant growth" in the years ahead. "We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years."

Copyright Agence France-Presse, 2010

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