Shell issues profit warning
The Anglo-Dutch oil giant believes its earnings to have been impacted by various factors at play in the oil and gas market through 2013’s fourth quarter
The price at the pump may continue to shock consumers, but oil giants are facing cost challenges of their own. Royal Dutch Shell has just issued a profit warning, citing weak industry conditions and higher exploration expenses as key reasons for poor performance in 2013
Royal Dutch Shell has warned that its fourth quarter results have fallen short of past performance, due to weak industry conditions, higher exploration expenses and lower downstream volumes. Based on a current cost of supplies basis, the Shell’s fourth quarter earnings are expected to amount to approximately $2.9bn, though are yet to be officially announced until the company’s annual report is made public on January 30.
“Our 2013 performance was not what I expect from Shell. Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery,” said the company’s CEO Ben van Beurden in a statement.
[S]hell’s full year earnings are expected to amount to approximately $16.8bn, far short of 2012’s $27bn
The company’s earnings, if expectations are anything to go by, represent a huge shortfall on the quarter previous, which came in at $4.5bn, and are 73 percent short of 2012’s fourth quarter, which equated to $5.6bn.
The company statement went on to add that its earnings have also been impacted by a weak Australian dollar, as well as the security situation in Nigeria, which remains a challenge to this very day.
The announcement went on to estimate that net capital investment in the fourth quarter was $15.8bn, bringing the full year total to $44.3bn. Elsewhere, cash flow from operating activities through the fourth quarter is believed to be $6bn, and the full year somewhere in the region of $40.4bn.
Although the audited results will only be made public once the company’s annual report is released, Shell’s full year earnings are expected to amount to approximately $16.8bn, far short of 2012’s $27bn and shorter still of 2011’s $28.6bn.
The news comes only a fortnight after van Beurden’s term as CEO began, and many will now be watching closely to see how the company veteran, who has been at Shell since 1983, will attempt to initiate a turnaround from hereon.
