Shell Profits Plunge 53% on Falling Oil Prices

July 26, 2012
Profits were at $4.06 billion for second quarter.

Royal Dutch Shell (IW 1000/2) said Thursday that second-quarter net profits tumbled 53% to $4.06 billion on the back of sliding world oil prices and slack demand.

Adjusted net profits, stripping out movements in the value of inventories and other non-operating items, fell almost 13% to $5.72 billion in the three months to the end of June.

That compared with $6.55 billion in the same period of last year and undershot market expectations of $6.46 billion, according to analysts polled by Dow Jones Newswires.

Total oil and gas production rose 1.9% to 3.103 million barrels of oil equivalent per day, aided by giant projects in Canada and Qatar.

"Our industry continues to see significant energy price volatility as a result of economic and political developments," chief executive Peter Voser said .

"We are moving forward in volatile times. Our profits have fallen with energy prices."

However, Voser said Shell would plough ahead with its plans to spend $32 billion this year on the expansion of its production portfolio.

Group revenues dipped to $119.89 billion in the quarter from $124.56 billion.

Royal Dutch Shell's 'A' shares slid 3.09 percent on the results to 2,119.50 pence in early afternoon deals on London's benchmark FTSE 100 index, which was 1.08 percent higher at 5,557.46 points.

"A drop in earnings had been expected, but not to this extent as evidenced by the share price fall," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"The deterioration in the oil price of late has weakened profitability. At a time when investors are looking towards blue chip reliability, the disappointment contained in the headline figures is palpable."

In a separate development, Thai oil giant PTT announced that 72.14 percent of Cove Energy shareholders have accepted its £1.22-billion (US$1.9 billion) agreed takeover bid for the Africa-focused group.

PTT's bid, launched in May, had trumped an earlier takeover attempt by Shell.

Shell acknowledged that its Cove offer has now lapsed because it had not received the required number of acceptances.

Copyright Agence France-Presse, 2012

Popular Sponsored Recommendations

Digitally Transforming Data and Processes With Product Lifecycle Management

Oct. 29, 2023
Manufacturers face increasing challenges in product development as they strive to consistently deliver improved results. Discover how industry leaders are improving time-to-market...

Beat the odds. Optimize product costs. Mitigate supply chain issues.

Sept. 12, 2023
Leverage fact-based supplier negotiations. Enhance design. Get to market faster. Our comprehensive Should Cost Analysis guide shows you how.

The Ultimate Ecommerce Excellence Checklist

Oct. 2, 2023
Scaling ecommerce operations is no easy task when your business is moving fast. Assess your current ecommerce maturity level and set optimization priorities with this practical...

The Benefits of Continuous Thermal Monitoring

Oct. 17, 2023
Read this eBook to learn more about collecting and using data intelligently to improve performance.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!