Recession? Your head!
Shell posted one of the biggest profits in history for a British
company, revealing today that it made $31.4 billion (£22 billion)
in 2008, up by 14 per cent on 2007.
The record profits — equivalent to £60 million a day — came as
the oil giant admitted that it was being hit by the plunging crude
oil price and weakening demand for oil and gas.
Profits in the fourth quarter of 2008 fell by 28 per cent to
$4.8 billion, which was below City forecasts.
Although critics of oil companies, which have accused them of
making windfall profits at the expense of motorists, are expected
to seize on the record profit figure, City analysts are more
concerned about the speed of deterioration in their finances since
the oil price peaked last summer.
Jeroen van der Veer, the chief executive of Shell, who is
attending the World Economic Forum in Davos, called the performance
satisfactory given the pressure on demand for oil and gas because
of the weaker global economy.
Shell shrugged off the decline in profits, pushing up the
fourth-quarter dividend by 11 per cent to $0.40 a share and
signalling plans to pay a first-quarter dividend for the current
year of $0.42, up 5 per cent.
Peter Heijen, a Theodoor Gilissen Bankers oil analyst, said that
although fourth-quarter earnings were slightly below expectations:
"I think the most important thing was that they increased [the
dividend] by 5 per cent, which is a sign that management has
confidence in the business going forward at the current oil
price.”
Mr van der Veer said: "Our strategy remains to pay competitive
and progressive dividends, and to make significant investments in
the company for future profitability. Industry conditions remain
challenging and we are continuing the focus on capital and cost
discipline in Shell.”
For British shareholders, the dividend increases will be
significantly greater in sterling terms because of the weaker
pound.
The profits were struck on Shell's preferred measure, the
so-called current cost of supplies basis, which measures underlying
performance.
In strict fair-value accounting terms, Shell reported a $2.8
billion loss for the quarter because of the dwindling value of its
huge inventories.
Brent crude mostly traded in the range of $50 to $70 a barrel in
the quarter, compared to the $70 to $90 range in the fourth quarter
of 2007.
Since July 2008, when oil reached a record $147 a barrel, it has
fallen sharply to a current price of $41.63.