Shell restructuring sees fall in profits

Royal Dutch Shell reported an 8% fall in full-year profits to $3.5 billion (£2.7bn).

The oil giant’s figures came in below analysts’ expectations and compare with a $3.8bn (£2.6bn) profit last year.

The results were dragged down by a lacklustre fourth quarter, which saw profits fall 44% to $1bn (£789 million).

The results come despite oil prices recovering from around $27 a barrel last January to more than $55 a barrel.

Chief executive Ben van Beurden said: “We are reshaping Shell and delivered a good cash flow performance this quarter with over $9bn (£7.1bn) in cash flow from operations.

“Debt has been reduced and, for the second consecutive quarter, free cash flow more than covered our cash dividend.”

Excluding exceptional items, profits fell 37% to $7.18 bn (£5.6bn) for the year.

Shell, which completed a $52.6bn (£36.4 bn) acquisition of BG Group last year, is embarking on a cost-cutting drive and a $30bn (£24.6 bn) divestment initiative.

This week it announced the sale of a package of North Sea assets for up to $3.8bn (£3bn) to smaller rival Chrysaor.

Mr van Beurden said: “We are operating the company at an underlying cost level that is $10bn (£7.9 bn) lower than Shell and BG combined only 24 months ago.

“We are gaining momentum on divestments, with some $15bn (£11.8bn) completed in 2016, announced, or in progress.

“We are on track to complete our overall $30bn (£23.6bn) divestment programme as planned.”

Shell plans to pump $25bn (£19.7bn) into “high-quality, resilient projects” this year.

The results were dragged down despite a rise in fuel prices.