Royal Dutch Shell’s share price falls as energy giant says earnings will drop dramatically amid cost-cutting measures
Royal Dutch Shell's share price fell this morning after the energy giant warned that earnings will fall dramatically for the full year as a result of lower oil prices.
Shell said its full year 2015 earnings on a CCS basis, excluding identified items, was expected to be in the region of $10.4bn – 10.7bn – nearly half the £19bn it posted last year.
Meanwhile income attributable to shareholders will be around $1.6bn to $2bn – a fraction of the $14.87bn from 2014.
Gearing has also risen. It is expected to be 14 per cent at the end of 2015, including net debt of $27bn, compared to 12.2 per cent at the end of 2014, and 12.7 per cent at the end of third quarter 2015.
Royal Dutch Shell's share price was down 3.7 per cent in early trading.
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Royal Dutch Shell chief executive Ben van Beurden said:"I'm pleased with Shell's operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness."
The drops come despite Shell's efforts to cut back on costs amid a measure restructure of the business, which includes 10,000 job cuts as part of a move to "rejuvenate the company and improve shareholder returns".
The redundancies will affect both staff and director contractor roles. Back in July, the company said it was expecting to make 6,500 positions redundant in 2015. That was then raised to 7,500.
The figure issued today combines this number with a further 2,800 to be cut back in 2016.
"Bold, strategic moves shape our industry," Shell said today. "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.
"Shell's drive to improve competitive performance is delivering at the bottom line. Operating costs have reduced by $4bn, or around 10 per cent in 2015, and the company expects Shell’s costs to fall again in 2016, by a further $3bn.
"Synergies from the BG combination will be in addition to that. Together, these actions will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue."
Shell said it was taking "impactful steps to refocus and reduce capital spending".
Its capital investment in 2015 is expected to come in at around $29bn, a 20 per cent reduction on the previous year – equivalent to $8bn.