LONDON: Royal Dutch Shell on Wednesday (Thursday in Manila) said it expected a sharp decline in full-year net profits, as plunging oil prices slash the earnings of leading energy companies.
The Anglo-Dutch group forecast in a statement that profit after tax of between $1.6 billion and $2.0 billion (1.5 billion euros and 1.8 billion euros) during 2015. This compares with net profit of almost $15.0 billion in 2014.
The energy major also predicted that profit on a current cost-of-supplies (CCS) basis—which strips out changes to the value of its oil and gas inventories—would stand at between $10.4 billion and $10.7 billion.
That was more than half the $22.56 billion registered in 2014.
Shell is slashing thousands of jobs, selling assets worth billions of dollars and exiting projects as oil prices continue to plunge on world markets because of a supply glut.
The company is meanwhile close to completing a mega-takeover of British rival BG Group.
“The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns,” the group said Wednesday before its official full-year earnings announcement due February 4.
In reaction to the results, Shell’s ‘B’ share price dived 6.72 percent to close at 1,277.50 pence on London’s FTSE 100 index, which finished 3.46 percent lower at 5,673.58 points.
The energy sector was also rocked Wednesday by fresh 12-year lows for world oil prices.
“The dive in the price of oil is taking its toll on all oil companies,” said Graham Spooner, investment research analyst at online trading firm The Share Centre.
“Just like its peers, this company [Shell] has been reporting significantly lower profits over the last few quarters.
“Investors should appreciate that Royal Dutch Shell has made a commitment to reduce costs and improve efficiency which should be supportive of its balance sheet.”