Royal Dutch Shell’s profits have fallen by more than 50% after it was hit by the falling oil price, but the results were still better than City forecasts.
Shell’s first-quarter earnings, excluding one-time items, fell from $7.33bn (£4.8bn) to $3.25bn (£2.1bn). Its quarterly dividend held at 47¢ a share.
Profits for the first three months of 2015 at Shell’s exploration and production arm slumped from $5.7bn (£3.7bn) a year to $675m (£437m), but profits from downstream operations including refining and other non-production businesses rose from $1.58bn (£1bn) to $2.65bn (£1.7bn). That helped group earnings exceed analysts’ average forecast of $2.42bn (£1.6bn).
The Anglo-Dutch firm – Britain’s biggest oil company – is selling unwanted operations and cutting spending to support its earnings after the price of oil roughly halved in the past year. This month it announced the £47bn takeover of BG Group to capitalise on the weaker oil price.
Shell’s chief executive, Ben van Beurden, said: “Our results reflect the strength of our integrated business activities against a backdrop of lower oil prices. 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.
“Asset sales total over $2bn (£1.3bn) so far this year, as we successfully reduced our onshore footprint in Nigeria. In parallel we continue to reduce our operating costs and capital spending; and by deferring and reshaping new projects, we can achieve further efficiencies and savings in the global supply chain.”
The items excluded from Shell’s earnings included a gain of $1.4bn (£900m) from selling operations and a credit of $600m (£389m) resulting from tax cuts on North Sea operations announced in the budget.
BP’s first-quarter results beat City forecasts on Tuesday due to strong downstream business and because it accounted for the full expected benefit of the North Sea tax cuts. Like Shell, BP’s exploration and production business suffered a profit slump amid the collapse in the oil price.
