Shell mirrors BP as worldwide earnings slide
ANALYSTS likened Shell’s first quarter performance to that of rival BP after it beat expectations – despite posting a 32 per cent reduction in pre-tax profits.
Income fell from $8.55bn (£5.58bn) in the first three months of 2014 to $5.84bn in the same period of this year, while revenue dropped from $109.7bn to $65.7bn. Earlier this week BP reported similarly poor but guidance-beating figures.
Earnings in the upstream side of the business plunged by 88 per cent, from $5.7bn to $675m, which the company attributed to “the significant decline in oil and gas prices and lower contributions from trading”. The downstream operation moved from a $1.01bn loss to earnings of $2.5bn.
Kim Fustier, analyst at Edison Investment Research, said this represented the downstream division’s best quarterly earnings since the “golden age of refining” in 2006-7.
Shell boss Ben van Beurden said the results reflected the strength of the firm’s integrated business activities, “against a backdrop of lower oil prices”.
He added: “In what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell.”
The group previously predicted that capital expenditure for 2015 would be flat year-on-year at $35bn, however yesterday reduced it by $2bn.
Shares in Shell, which recently announced a £47bn deal to buy BG Group, were up by 0.37 per cent.