Royal Dutch Shell issued a "significant" profit warning, detailing across-the-board problems and the extent of the challenges facing the oil major's new boss Ben van Beurden , who took over two weeks ago. The warning comes nearly 10 years to the day after Shell, the western world's No 3 oil company, revealed the so-called reserves accounting scandal, when the group dramatically downgraded its reserves estimates. It also follows a similar warning from Chevron, the second-largest US oil company, and reflects how the industry is having to grapple with replacing reserves, lower oil prices and the need to control costs. "Our 2013 performance was not what I expect," van Beurden said, announcing a cut in forecasts to fourth-quarter earnings excluding identified items on a current cost of supplies (CCS) to $2.9 billion , from market expectations of about $4 billion . The last time the Anglo-Dutch firm reported an adjusted earnings figure as low as $2.9 billion was in the fourth quarter of 2009. Since then the main operating metric has averaged $5.6 billion per quarter. Analysts said Shell appeared to have suffered a perfect storm in the last three months, due to weak refining profit margins, higher production costs, output stoppages in Nigeria and a weakening of the Australian dollar. However they noted that the detailed warning would also enable the new CEO, who has been at Shell since 1983, to use the results day on January 30 and a Management Day in March to set out his new strategy. "This should bring to an end what has proved to be something of an "annus horribilis" for Shell which has seen a key production target missed and weaker than anticipated profitability in North America ," Barclays said in a note. Shell, which dates its history back to 1833, also missed forecasts for its third-quarter trading in October. One British-based shareholder who asked not to be named said no one was that surprised, even though the number was bad. He said it would increase pressure on the new chief executive to keep a tighter control on costs. "There's quite a bit of expectation building for when they have their full-year results."
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- FDIC Files Lawsuit on Behalf of Banks Allegedly Hurt by Libor Scandal
- Keurig Adds Peet's coffee, Alters Starbucks deal
- Motley Crue's Nikki Sixx Marries Model Courtney Bingham
- U.S. to Relinquish Gov't Control Over Internet
- Chinese e-Commerce Giant Alibaba Gears for IPO in U.S.
- Some California Cities Seeking Water Independence
- Will Missing Malaysian Jet Prompt Aviation System Change?