Royal Dutch Shell today warned of a long haul to recovery after the oil giant reported a 73 per cent slide in profits between July and September.
The Anglo-Dutch company said third quarter earnings fell to 2.99 billion US dollars (Ј1.83 billion) as a result of weaker oil prices and the ailing global economy.
Chief executive Peter Voser said there were indications that energy demand and pricing were picking up, but said the outlook remained uncertain and that his company had ruled out a quick recovery in trading conditions.
As part of a previously announced restructuring programme, Shell added that around 5,000 staff will have left the company by the end of the year. It reduced operating costs by one billion dollars (Ј611 million) in the first nine months of the year.
Mr Voser added: «Our strategy remains on track, although the near-term industry outlook remains challenging.»
Today's figures were ahead of market expectations, but the upside was far short of the margin by which BP results exceeded City hopes on Tuesday.
BP shares surged 5 per cent on Tuesday after the company reported bigger-than-expected cost savings of three billion US dollars (Ј1.84 billion) for the first nine months and said production was 7 per cent higher than a year earlier. Profits for the quarter halved to 4.98 billion US dollars (Ј3 billion).
Shell said oil and gas production for the period was unchanged on a year earlier, although the figure was higher on an underlying basis.
Investors reacted with disappointment to Shell's update, with the company's shares down more than 3 per cent in early trading.
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said the preferred play within the sector for investors remained BP.
He added: «In comparative terms, Shell was always going to have a mountain to climb following BP's stellar performance earlier in the week. Unfortunately these numbers leave it some way short of the summit.
„ In particular, the outlook from the company is decidedly cautious, whilst rival BP has a significant head start in terms of streamlining the business, with the associated cost savings.“
Author: Graeme Evans
