London: Royal Dutch Shell Plc posted a 70% fall in net profit in the second quarter, as oil prices and refining margins tumbled, but foreign exchange gains helped the oil major beat forecasts.
The world’s second-largest non government-controlled oil company by market value said on Thursday second-quarter current cost of supply (CCS) net income, which strips out unrealised gains or losses related to changes in the value of fuel inventories, was $2.34 billion.
Excluding one-off items, the result was $3.15 billion, compared with an average forecast of $2.55 billion in a Reuters poll of eight analysts.
“Blow-out numbers considering the environment. This is a big positive,” said Jason Kenney, oil analyst at ING.
Chief Executive Peter Voser, who took office earlier this month, gave a sombre outlook for energy demand and prices, and promised to adapt to the tough environment by slashing costs.
“We are not banking on a quick recovery,” Voser said in a statement.
Hague-based Shell said it achieved $700 million in cost savings in the first half of the year compared with the same period in 2008.
Since 1 July, the company has cut 20% of senior management positions and said there would be “substantial further staff reductions”.
The Anglo-Dutch oil major said its capital investment budget would fall 10% next year to $28 billion. It did not give a reason, although industry costs are falling, after doubling since 2004.
The main outperformance versus analysts’ forecasts was in Shell’s Corporate division, which benefited from foreign exchange gains of $379 million, compared with a gain of $27 million in the same period of 2008.