SHELL was cast into the shadow of arch-rival BP yesterday as the oil major unveiled a 73 per cent slump in profits, and announced it was axing 5,000 jobs worldwide this year.
Shares in British/Dutch-owned Shell also took a near-3 per cent hit as the group warned there was little sign of an early upturn as the sluggish economy and weaker oil prices weigh on recovery.
The lion's share of the jobs to go – about 5 per cent
of the 100,000-strong global workforce – are managerial. The latest figure includes the 150 senior managers that new chief executive Peter Voser revealed were going to take his most senior team down from 750 to 600.
There was no geographical breakdown given by Shell, but sources said that 50 per cent of the overall job losses will be in the UK, Netherlands and the United States. Shell has about 2,000 shore-based staff in Scotland, at three sites.
The news came as the oil major revealed that net profit fell to $2.99 billion (£1.8bn) in the three months to end-September. That compares with $10.9bn (£6.6bn) in the same period of 2008.
City oil analysts said the group's results and pessimistic outlook contrasted poorly with BP's Q3 results earlier this week. Although BP's profits halved, they still came in close to Square Mile forecasts.
Richard Hunter, of Hargreaves Lansdowne, said: "Shell was always going to have a mountain to climb following BP's stellar performance earlier in the week. Unfortunately these numbers leave it some way short of the summit."
Hunter said it was likely that BP remained "the preferred play" for investors in the stock market oil sector. Analysts at Citigroup said Shell's results painted a "disappointing picture."
Voser said in a statement yesterday: "We see some indications that energy demand and pricing are improving, but the outlook remains uncertain, and we are not expecting a quick recovery."
He said the restructuring programme he launched just before taking the helm in July had lowered costs by $1bn, excluding $2.5bn in savings related to foreign exchange moves, in the first nine months of 2009.
Shell also revealed flat oil and gas production in Q3 compared with the same period in 2008, at 2.93 million barrels of oil equivalent per day. BP reported a 7 per cent rise in production in the summer months.
Shell faced continuing pressures in both its exploration and production (E&P) and "downstream" refining operations.
E&P earnings slumped 82 per cent to $1.5bn from $8.6bn in the same quarter last year, reflecting significantly lower oil and gas prices.
Downstream earnings fell 47 per cent to $1.3bn from $2.4bn as the group suffered, like the rest of the oil industry, from squeezed profit margins.
Shell's shares closed down 54.5p at 1,856.5p.
