Oct 30, 2014 5:06 AM
Shell hurt by oil price drop, names new chairman
The Associated Press
AMSTERDAM (AP) Shell, Europe's largest oil company, reported Thursday a small fall in third quarter net profit against a backdrop of sliding oil prices, and named former DuPont Chief Executive Charles Holliday to become chairman of the board in 2015.
Net profit was $4.46 billion, down 4.5 percent from $4.67 billion in the same period a year earlier. The 2014 figure includes a one-time $350 million provision for future tax liabilities in Australia.
Royal Dutch Shell PLC said that when stripping out the impact of fluctuations in the price of oil, earnings rose 24 percent to $5.27 billion. That measure of earnings, called "current cost of supplies", or CCS, is favored by the industry to gauge underlying profitability of operations.
"The recent decline in oil prices is part of the volatility in our industry," said Chief Executive Ben van Beurden in a statement. He said the company is trying to "get a tighter grip on performance management, keep a tight hold on costs and spending, and improve the balance between growth and returns."
Since becoming CEO this year, Van Beurden has slashed investment spending at Shell.
Shell's production arm reported CCS profit excluding one-time charges of $4.34 billion, a 25 percent increase, which Shell said was due to high-margin oil projects coming on line. However, actual production fell by 5 percent to 2.79 million barrels per day, which Shell attributed in part to an expired license in Abu Dhabi and to capacity in Nigeria that has been temporarily shut due to safety concerns.
The company said at its downstream arm, which includes refining, CCS profit excluding charges doubled to $1.79 billion on better margins.
Holliday, who has written a book on sustainable business development, will replace outgoing chairman Jorma Ollila if approved at the shareholders' annual meeting next year.