Shell remains upbeat despite first loss in 10 years
29 Jan 2009
Staggered by the steep downturn in oil prices, Royal Dutch Shell posted a $2.81 billion net loss in the final quarter of 2008, the company said on Thursday.
This was the first time in 10 years that the oil major posted a net loss for any quarter. The loss comes in the backdrop of a net profit of $8.47 billion in the final quarter of 2007, when crude oil prices soared before peaking last July.
The decline in the fourth quarter meant that net profit for the year 2008 slipped by 16 per cent to $26.28 billion. Nonetheless, chief executive Jeroen van der Veer said in a statement that given the slump in demand for oil and oil products, "we delivered satisfactory performance" in the final three months of the year.
Shell's fourth-quarter loss was ascribed by the company to changes in the value of its oil inventories. Based on a calculation called "current cost of supplies," which excludes the impact of lower oil prices on the value of inventories, profit dropped 28 per cent to $4.79 billion in the fourth quarter but rose by 14 per cent to $31.37 billion for all of 2008, the company said.
"Our strategy remains to pay competitive and progressive dividends and to make significant investment in the company for future profitability," he said.
Production was basically flat at 3.41 million barrels a day, but it sold oil and gas for 31 per cent less than it did a year ago. Demand for Shell products decreased throughout its business, with chemical product volumes dropping 20 per cent.
Shell recorded net one-off gains of $897 million, mostly on asset sales. Bit stripping out those gains, the Hague-based oil giant fell short of profit estimates of most analysts by around $200 million.
Unlike rivals, Shell isn't slashing spending. It is looking to spend between $31 billion and $32 billion on capital in 2009 against the $32 billion it spent last year. The company also said it would raise its next dividend for the first quarter of 2009 by five per cent to 42 cents a share.
