Profits dip as Shell feels bite

Recession slashes Shell's profits as company records big losses during December quarter on back of falling oil prices

By Brad Gardner

The worldwide recession has slashed Shell’s profits, with the company recording big losses during the December quarter on the back of falling oil prices.

Shell’s net earnings during the period dropped 28 percent compared to the same quarter last year, despite full year net earnings rising from $27.6 billion to $31.4 billion.

Results show Shell lost $US2.81 billion ($4.3 billion) during the fourth quarter, while full year reported income fell 16 percent.

"We delivered satisfactory performance in the fourth quarter of 2008, given the pressure on demand for oil and gas due to a weaker global economy," Shell Chief Executive Jeroen van der Veer says.

A statement from the company says the significant drop in commodity prices affected net working capital, which fell $15 billion during the December quarter.

Van der Veer says industry conditions "remain challenging", forcing Shell to slash expenditure by focusing on "capital and cost discipline".

The share price fell 27 percent when compared with the same quarter a year ago, while the company spent less on investment than originally planned.

Shell expects to invest about $32 billion this year, which it says will balance its commitments to projects "with the more challenging economic landscape in 2009".

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