17 January 2014, Sweetcrude, LONDON – Royal Dutch Shell warned on Friday that its fourth-quarter figures are expected to be significantly lower than recent levels of profitability because of oil and gas prices and problems with its refining business.
The sharp cut in forecasts for earnings on a current cost of supplies basis, CCS, excluding identified items, to $2.9 billion from market expectations of about $4 billion, is the first major move by new Chief Executive Ben van Beurden, who took over at the start of the year.
Shell also missed analyst forecasts for its third-quarter trading in October, saying that weak refining profit margins, higher production costs and output stoppages in Nigeria had weighed on its performance.
“Our 2013 performance was not what I expect from Shell,” the CEO said. “Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”
Analysts had been expecting fourth-quarter earnings on the CCS basis of about $4 billion. In the third quarter, CCS earnings excluding identified items came in at $4.5 billion, down from $6.6 billion in the same period of 2012.
The big drop in profits has been led by the significantly weaker industry refining conditions that have been widely flagged by the company and others in the industry.
*Reuters
