Shell slashes 5,000 jobs as profits tumble

Written by Reuters | London | Updated: Oct 30 2009, 09:31am hrs
Oil majors Royal Dutch Shell Plc and Eni warned of a slow recovery, highlighting weak energy demand and operational challenges, as their profits slumped.

Shell, Europes largest oil company by market value, said it was cutting 5,000 jobs to tackle the tough economic environment. The results and pessimistic outlook contrast with third- quarter earnings from London-based BP Plc which smashed forecasts by 50%, lifting sector shares on Tuesday on hopes the industry would weather the economic slump better than expected.

They also follow renewed fears the global economic recovery may be more protracted that some had thought, a factor which weighed on crude prices on Thursday. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery, Shell chief executive Peter Voser said in a statement.

Shells London-listed A shares traded down 3.0% at 1,853 pence at 0820 GMT on Thursday, while Enis shares dropped 3.1% to 17.02 euros against a 1.0% drop in the DJ Stoxx European oil and gas sector index. Milan-based Eni predicted European demand for natural gas and fuels would continue to shrink, and said it was cutting its production target for the year.

Shell said third-quarter current cost of supply net income, which strips out unrealised gains or losses related to changes in the value of fuel inventories, fell 73% to $2.99 billion. Excluding one-off and non-cash items the result was $2.62 billion, slightly ahead of an average forecast of $2.55 billion from a Reuters poll of eight analysts.

Enis third-quarter adjusted net profit, which also strips out inventory gains and non-operating items, fell 60.5 percent to 1.15 billion euros compared with a Thomson Reuters I/B/E/S consensus of 1.11 billion.