Shell profit struggles in Q3

2012-11-01 12:59

London - Energy giant Royal Dutch Shell reported on Thursday a 2% rise in net profit to $7.139bn in the third quarter, saying it had faced "volatile energy markets".

Shell added in a results statement that adjusted net profit, a key measure stripping out changes in the value of inventories and other non-operating items, fell by 6% to $6.56bn in the three months to September from the equivalent figure last year.

However, that beat market expectations for profit of $6.31bn, according to analysts polled by Dow Jones Newswires.

Group revenues meanwhile declined by 8.4% to $115.43bn in the reporting period.

"Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets," said Chief Executive Peter Voser in the earnings release.

"Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in integrated gas and oil products."

He added: "I am pleased with our progress in a difficult industry environment."

Total production fell by 1% to 2.982 million barrels of oil equivalent per day in the third quarter.

But stripping out the impact of asset sales, security problems in Nigeria and other one-off factors, underlying production was 1% higher.

Shell's net profit figure included the impact of a $1.01bn gain on the value of inventories and a $432m impairment, mainly on natural gas assets in the United States and tax changes in Britain.

In response to Thursday's results, Shell's 'A' share price gained 0.71% to 2,140 pence in morning deals on London's FTSE 100 index of leading companies, which was 0.16% higher at 5,791.72 points.

"Shell is continuing to generate substantial cash flows and we expect the priority to be re-investment but the company could afford a more generous dividend if it chose to," said Investec analyst Stuart Joyner.

Earlier this week, rival energy group BP had revealed on Tuesday that net profits jumped 7.7% to $5.43bn in the third quarter, as it was boosted by a strong performance in its downstream business.

French oil group Total on Wednesday reported a 7% fall in net third-quarter profit, but its key adjusted figure excluding changes in inventory values soared by 20% to €3.348bn.