Shell share price: Q4 earnings drop as momentum slows in 2013

on Jan 30, 2014
Updated: Apr 9, 2020
Listen, Thursday, January 30: Royal Dutch Shell Plc (LON:RDSA) today posted a drop in its fourth-quarter and full-year earnings. The results however were in line with the company’s profit warning issued earlier this month.

Today’s results are the first reported under Shell’s new chief executive Ben van Beurden who today updated investors on the company’s priorities aimed at “sharper performance and rigorous capital discipline”.
Shell’s share price, which has lost just under eight percent over the past year, closed 0.09 percent up at 2,125.50p in London yesterday.

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**Shell’s momentum slows in 2013**
The Hague-based Shell said today in a statement that its Q4 earnings on a current cost of supplies basis (CCS) had dropped to $2.2 billion (£1.3 billion) compared with $7.4 billion (£4.5 billion) in the prior-year quarter while full-year CCS earnings came in at $16.7 billion compared with $27.2 billion in 2012. Fourth-quarter CCS earnings excluding identified items were $2.9 billion compared with $5.6 billion a year ago. Full-year CCS earnings excluding identified items dropped to $19.5 billion compared with $25.3 billion in 2012.

Shell’s fourth-quarter 2013 basic CCS earnings per share excluding identified items slumped by 49 percent year-on-year while full-year basic CCS earnings per share excluding identified items dropped by 23 percent as compared with 2012.
“Our momentum slowed in 2013,” Shell’s new CEO van Beurden said in a statement. We must improve our financial results, achieve better capital efficiency and continue to strengthen our operational performance and project delivery.”

Earlier in January, van Beurden commented that the group’s performance in 2013 was not what he expected from Shell with the company warning that its fourth-quarter and full-year results would be adversely impacted by problems across the board. (Shell share price drops as energy giant issues profit warning)

Shell’s new CEO today updated investors on the company’s priorities such as improving financial performance and enhancing capital efficiency, including further asset disposals. While van Beurden noted that Shell’s overall strategy was sound, he pointed out that the company had “lost some momentum in operational delivery, and we can sharpen up in a number of areas”.
Van Beurden also pulled the plug on Shell’s Arctic drilling plans this year following a ruling of an US court that the US Department of the Interior had wrongly awarded offshore oil leases in the Chukchi Sea in 2008.
“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” van Beurden said. “We will look to relevant agencies and the Court to resolve their open legal issues as quickly as possible.”
**Asset disposals**

In today’s statement, Shell said that it was considering further divestments such as selling some of its marketing assets in Norway and Italy. It also noted that it had received indications of interest in its refining business and parts of its marketing portfolio in Australia.
The company has in recent weeks stepped up asset disposals amid investor pressure to improve returns and rein in spending with recent media reports suggesting that divestments could reach $15 billion over the next two years.
Shell announced yesterday that it had sold a 23 percent stake in the Parque das Conchas project offshore Brazil for about $1 billion (£602 million). (Shell share price: Group sells LNG project stakes Down Under for $1.14bn)
The Financial Times yesterday quoted Deutsche Bank analyst Lucas Hermann as saying in a research note that the oil major’s divestments and “in certain cases associated capex obviation emphasise in our view Shell’s moves to bring its cash cycle back into balance and as such are expected to be received favourably by investors”.
**On January 29, buy Shell shares at 2,126.00p.**
**On January 29, sell Shell shares at 2,125.50p.**

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