By BRIAN SWINT and EDUARD GISMATULLIN
Royal Dutch Shell said profit plunged because of
markets and mounting
losses in the Americas, surprising investors with an early
earnings report that wiped out $10 billion in shareholder
Europes biggest oil company, in its first profit
warning since 2004, said adjusted earnings excluding one-time
items and inventory changes were about $2.9 billion in the
fourth quarter. That compares with $4.5 billion in the
previous three months and an average fourth-quarter analyst
estimate of $4.9 billion.
Its a shock, Jason Kenney, an analyst at
Banco Santander in Edinburgh, said Friday by telephone. Shell
had to pre-announce to get the market to reality, but
even so its a very weak set of results.
Shell fell as much as 4.4% in London trading, the most since
Oct. 31, and was down 2.1% at 2,148.5 pence as of 1:11 p.m.
CEO Ben van Beurden, who took over from Peter Voser at the
start of the year, is facing rising costs for new project
s and stagnant oil prices.
Higher exploration expenses and maintenance
shutdowns have cut
output volumes, while a weaker refining
market and disruptions in
Nigeria have also pushed down profit and limited share
The impact on Shells 2014 performance will be
relatively limited, and despite the bad news, we are
quite sanguine about Shell, said Peter Hutton, an
analyst at RBC Capital Markets in London. Its a
reminder that Shell are tackling the issues. Its an
opportunity to get the store ready for the new CEO coming
Shell climbed 3.4% from the start of 2013 through yesterday,
compared with a 15% advance for BP and ExxonMobil's 14% gain.
Our 2013 performance was not what I expect from
Shell, van Beurden said Friday. Our focus will be
on improving Shells financial results, achieving better
capital efficiency and on continuing to strengthen our
operational performance and project
Results also missed analyst estimates in the third quarter as
profit from refineries sank and crude theft and sabotage in
Nigeria cut output. Shell has promised to curb net spending
s by offsetting costs with
a faster pace of asset sales.
The announcement comes two weeks before the companys
scheduled earnings release. Full-year 2013 earnings are
forecast to be $19.5 billion, with both production and refining
results lower than a year
earlier, the company said. The Hague-based Shell reported
profit of $25.1 billion for 2012.
Brent crude prices, the benchmark for more than half the
worlds oil, slipped 0.3% last year, the first time that
prices failed to gain since 2008.
Shell expects net capital investment to be about $15.8
billion for the fourth quarter. For 2013, net investment will
be about $44.3 billion.
The company may report a $1 billion charge for the quarter
mostly because of unsuccessful exploration drilling, such as
in French Guiana, RBCs Hutton estimated.