London : Royal Dutch Shell Plc posted a 75 per cent fall in fourth-quarter profits to $1.18 billion (Dh4.3 billion), as the oil major was punished for falling output and its focus on the depressed refining and natural gas businesses.
Oil prices recovered in the quarter but gas prices were much lower than in the same period a year earlier, while refining margins collapsed to their lowest level in almost 15 years.
Europe's second largest oil company by market value said it made a $1.76 billion loss in its refining unit.
Chief executive Peter Voser said he plans to tackle the downstream weakness by selling or closing 15 per cent of Shell's refining portfolio, one of the largest in the industry, and slashing costs.
Voser targets $1 billion of cost savings in 2010, focused on the downstream refining division.
"These results confirmed the very negative trends affecting the downstream business," Colin Smith, oil analyst at ICAP, said.
Meanwhile, Finnish refiner Neste Oil and Swiss-based Petroplus reported losses yesterday due to the weak crude processing environment.
Shell's London-listed ‘A' shares traded down 2 per cent at £1.74 at 9.33am, lagging a 0.7 per cent drop in the DJ Stoxx European oil and gas sector index.
Cost savings
Nonetheless, analysts at Evo Securities said that the group continues to make good progress on cost savings and the growth projects remain on track.
Shell's results compare with a 23 per cent drop in fourth-quarter net income at ExxonMobil, and a 37 per cent drop at Chevron.
However, UK rival BP reported a 33 per cent rise in profits in the quarter thanks to its low reliance on refining and natural gas.
