Shell enjoys jump in quarterly profits

Oil giant Shell employs 90,000 people in 70 countries across the globe. Picture: PA
Oil giant Shell employs 90,000 people in 70 countries across the globe. Picture: PA
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ROYAL Dutch Shell showed signs it is riding out the “volatility” caused by falling oil prices yesterday as it revealed a sharp jump in quarterly profits.

The 31 per cent year-on-year improvement to $5.8 billion (£3.6bn) came as the Anglo-Dutch firm named American corporate heavyweight Chad Holliday as its new chairman from next year.

The third-quarter results performance was 5 per cent weaker than the previous three-month period but signalled progress for the oil major as it recovers from a shock profits warning at the start of this year.

It also offered a favourable comparison with London-based rival BP, which earlier this week reported profits of $3bn for the three months to 30 September, against $3.7bn a year earlier.

Shell chief executive Ben van Beurden said the company was delivering on the three priorities he set out when he took the helm of the company in January, including a better financial performance and strong project delivery.

He added: “The recent decline in oil prices is part of the volatility in our industry. It underlines the importance of our drive to get a tighter grip on performance management, keep a tight hold on costs and spending and improve the balance between growth and returns.”

Royal Dutch Shell, which employs some 90,000 people in more than 70 countries, said Jorma Ollila will step down from the board following the company’s 2015 annual general meeting, having served as chairman for nine years.

His replacement has been on the Royal Dutch Shell board since 2010 and was chief executive officer of American chemical company DuPont from 1998 to 2009. He was chairman of Bank of America until last month.

Ollila said: “He has a distinguished track record as an international businessman and I am sure he is the right person to chair the board going forward after the 2015 AGM.”

Holliday added: “I am honoured to be appointed chairman of this great company, and I look forward to working with Ben van Beurden and the whole board to deliver the strategy.”

Shell has one of the strongest balance sheets in the sector, with better debt ratios than its peers. Analysts expect the firm to maintain its dividend payout and continue to buy back shares, even in the face of weaker oil prices.

But some analysts also noted that Shell would not be immune from the strain on the broader industry, questioning whether it was doing enough.

BMO analyst Iain Reid said: “We remain somewhat concerned that the business improvement initiatives begun by new CEO Ben van Beurden will not be sufficient to offset this seasonal weakness, which is likely to be amplified by the current macro headwinds.”

Strong refining margins as a result of the lower crude oil prices lifted the group’s downstream earnings in the third quarter, doubling profit to some $1.8bn compared with a year earlier.

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