Shell cuts 10,000 jobs after fall in profits

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Shell has confirmed it is slashing 10,000 jobs as figures reveal its steepest fall in annual profits for 13 years.
The energy giant made $1.8bn (£1.23bn) profit for the fourth quarter of 2015, down from $3.3bn for the same period the previous year.

Total earnings for 2015 were $3.8bn, compared with $19bn in 2014.

Two weeks ago the oil firm hinted it would report a huge drop in profits.

In January, investors in Shell, which is Europe’s largest oil company, voted in support of its buyout of smaller rival BG Group.

It said it would cut 10,000 staff and contractor positions across both companies as part of the streamlining and integration from the deal.

Shell said that in 2015 it had reduced operating overheads by $4bn, or around 10%, and anticipated to cut costs by an extra $3bn this year.

Ben van Beurden, Chief Executive, said the company would take additional action if required: “Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that.”

At the time of the planned BG tie-up, oil was selling at about $55 a barrel, but has dropped sharply since then and is currently trading at about $30 a barrel, pushing some stakeholders to fight the plan.

A main shareholder in Royal Dutch Shell, Standard Life, said earlier this month that the price of oil needed to be $60 a barrel for the buyout to make financial sense.

The firm really restricted its investment over the year, while capital expenditure for the year was cut to $28.9bn, $8.4bn lower than in 2014.

Shell flogged $5.5bn worth of assets during 2015 and is forecasting to sell further $30bn of assets.

Shell’s results are calculated on the basis of replacement cost, which reflects the current cost of supplies and is widely seen as the best measure of an oil firm’s underlying performance.

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