Shell share price little changed as group unveils earnings slump

on May 4, 2016
Updated: Oct 21, 2019

Shares in Royal Dutch Shell (LON:RDSA) have slipped marginally lower this morning as the FTSE 100 group posted a hefty fall in quarterly earnings. Shell, which completed its tie-up with BG Group earlier this year, unveiled plans to trim spending further, warning that the lower oil price environment will continue to weigh on the group’s performance.

As of 0:50 BST, Shell’s share price had inched 0.11 percent lower to stand at 1,753.00p, largely in line with losses in the broader London market, with the benchmark FTSE 100 index having shed 0.18 percent to 6,174.44 points. The group’s shares have lost nearly 15 percent of their value over the past year, as compared with an 11.58-percent fall in the blue-chip index.
Shell announced in a statement this morning that its first-quarter earnings adjusted for one-time items and inventory changes had fallen 58 percent to $1.6 billion in the first three months of the year. The result, however, surpassed the $1.18-billion average estimate of Bloomberg-polled analysts.

“The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction,” the Anglo-Dutch giant’s chief executive Ben van Beurden commented in the statement. “This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out.”
Shell said today that it would cut 2016 spending for the combined group to $30 billion from a planned $33 billion, and warned that low oil and gas prices, significant maintenance at production sites as well as “substantial redundancy and restructuring charges” will impact second-quarter earnings. The company, however, maintained its dividend at $0.47 per ordinary share and $0.94 per American Depositary Share.
“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,” Laith Khalaf, senior analyst at Hargreaves Lansdown, said, as quoted by City A.M., forecasting that the group “will be hoping it gets bailed out by a recovery in oil and gas prices before it looks down and realises the ground it was running on has disappeared”.
“On a positive note, capital expenditure is falling faster than previously expected, which shows that the company is making operational progress in adapting to lower prices,” the analyst added.
As of 09:11 BST, Wednesday, 04 May, Royal Dutch Shell Plc ‘A’ share price is 1,750.50p.