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Shell shocks markets with profit warning

Friday, January 17, 2014 - 01:17

Jan 17 - Royal Dutch Shell says its Q4 earnings will be much lower than expected - at $2.9 billion compared to market forecasts of $4 billion. The announcement is one of the first major moves by new Chief Executive Ben van Beurden, who took over at the start of the year. David Pollard reports.

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The unscheduled warning dragged down shares in Shell by four percent in early trading. Others in the sector suffered the fall-out - BP shares down over a percent. Q4 earnings will take what the oil giant calls a 'significant' hit. Now expected at 2.9 billion dollars - against market expectations of 4.2 billion. It follows a slump in Q3 earnings to four and half billion dollars against 6.6 the year before. Shell says weak profits from its refinery operations, higher production costs and output stoppages in Nigeria are amongst factors to blame. But Shell insider Ben van Beurden took the helm as CEO two weeks ago. Hopes are high he may turn things around. Michael Hewson of CMC Markets. SOUNDBITE (ENGLISH) MICHAEL HEWSON, CMC MARKETS, SAYING: ''Earlier this week it announced that it was divesting assets, some of its North Sea assets. In September last year, it was also announcing that it was probably going to divest some of its North American assets in shale. And I think this could be part of a policy by the new CEO to maybe kitchen sink some of these underperforming assets.'' Booming shale oil production in the U.S. is pressuring oil prices there and giving U.S. refineries an advantage. It's also helped the U.S. become a major exporter of gasoline and diesel - further hitting margins at refiners - like Shell - in Europe and Asia.

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Shell shocks markets with profit warning

Friday, January 17, 2014 - 01:17