Royal Dutch Shell, the biggest oil firm in Europe, said that its profit for the fourth quarter dropped 44% as the price of the crude oil tumble. The UK-based oil firm also confirmed that it is trimming 10,000 jobs, a move to reduce its costs.
The company said that its fourth quarter earnings, on a current cost of supplies basis (ccs), decreased to $1.8 billion from $4.2 billion in the previous year period. Fourth quarter ccs earnings, excluding items, amounted to $1.8 billion, down from $3.3 billion in the same period last year.
Basic CCS earnings, excluding identified items, plunged 44% to $0.29 per share from $0.52 per share in the year ago period. Basic CCS earnings per share amounted to $0.29 for the reporting period, a decrease of 56% from $0.66 in the prior year period.
Income attributable to shareholders of Royal Dutch Shell was $939 million, up 58% from $595 million in the comparable period last year. Cash flow from operating activities fell 44% to $5.4 billion from $9.6 billion in the prior year period. Chemical sales volume grew by 7% compared to the prior year period.
For the full year 2015, Shell earned CCS earnings of $3.8 billion, down 80% from $19.04 billion in the previous year. Annual CCS earnings, excluding identified items, declined 53% to $10.7 billion from $22.56 billion in 2014.
Basic CCS earnings per share plummeted 80% to $0.61 in the year 2015 from $3.02 last year. In 2015, basic CCS earnings per share, excluding items, decelerated 53% to $1.69 from $3.57 in the previous year.
Annual income attributable to shareholders of Royal Dutch Shell totalled $1.9 billion, down 87% from $14.87 billion in 2014. The company posted CCS earnings of $3.84 billion in 2015, a decrease of 80% from $19.04 billion in the previous year.
Royal Dutch Shell announced quarterly dividend of $0.47 per ordinary share and $0.94 per American Depository share. The company expects to report a dividend of $0.47 per ordinary share in the first quarter of 2016.
On Monday, Standard & Poor's downgraded the company's long term single notch to A+ from AA-. The New York Times quoted Standard & Poor which states that it expects major gas and oil firms' present and future core debt coverage to remain under its rating guidelines for 2 or 3 years as the industry regulates to lower oil prices.
Last month shareholders of Shell approved the company's plan to acquire BG Group, despite the 40% fall in crude prices. Mr van Beurden, chief executive, tried hard to convince shareholders regarding the BG acquisition.
Brendan Warn, an analyst at BMO Capital Markets, told Bloomberg that BG is very important for Shell as it helps the company to develop and high-grade their assets. Moreover, BG provides an opportunity to separate Shell's expensive assets and concentrate on BG's projects.
Despite the supporting effects from chemicals and refining business, the falling oil price had an adverse impact on the company's quarterly earnings. The company is trying hard to compete with other major peers in the industry.
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