Royal Dutch Shell on Wednesday announced an 89% drop in net profit for the first quarter, blamed on slumping oil prices, adding that investment would be lower than expected.
Profit after tax stood at $484mn (€421mn) in the January-March period, down from $4.43bn in the first quarter of 2015, the Anglo-Dutch energy group said in an earnings statement.
Stripping out exceptional costs and changes to the value of Shell's oil stockpiles, profit retreated 58% to $1.55bn.
Shell, which recently completed a mega takeover of smaller British rival BG Group, added that it planned this year to invest less than had been forecast.
"We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today's lower oil price environment," Royal Dutch Shell Chief Executive Officer Ben van Beurden said in the statement.
"The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction. This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out."
However van Beurden noted that capital investment would be around $30bn this year, down from an estimate of $33bn. The revised spending level would meanwhile be some 36% lower compared with the combined investment of Shell and BG during 2014.
In early trading following the results, the price of Shell's 'A' shares fell 0.40% to 1,748 pence on London's benchmark FTSE 100 index, which was down 0.5% at 6,155.17 points overall.
"Royal Dutch Shell has taken a dramatic hit to revenues, but continues to maintain its dividend despite the storm that has hit global commodity prices," said Laith Khalaf, senior analyst at stockbroker Hargreaves Lansdown.
He added that the faster-than-expected drop in capital expenditure "shows that the company is making operational progress in adapting to lower prices".
The global oil market had nosedived from above $100 in mid-2014 to 13-year lows of around $27 in February, plagued by the stubborn supply glut. But prices have since rebounded to trade around $45 a barrel.
The slump in prices has caused energy groups worldwide to cut spending, slash jobs and sell assets.
However Shell still pressed ahead with its £47bn ($68bn) takeover of BG Group, in a deal aimed at strengthening Shell's position in the liquefied natural gas (LNG) market.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
US consumer spending rebounds; falling income a threat
Dutch airline KLM to get €3.4bn bailout package
ECB’s Lagarde says ‘probably passed lowest point’ of economic crisis
Business council seeks robust Qatar-Ukraine ties in various sectors
Alibaba replaces CEO of Southeast Asian arm Lazada
Bain to buy Virgin Australia in bold bet on shattered industry
Tencent’s Twitch streaming rival is hiding in plain sight
Samsung heir should not be indicted: Panel
Australia’s $37bn fund targets more private debt for yield