Shell looks to axe more jobs in the slump
SHELL, the world’s second biggest oil company, followed industry trends yesterday by posting a 70 per cent slump in profits on the back of lower crude prices and tumbling demand.
Earnings for the second quarter plummeted from $7.9bn (£4.8bn) in the same period last year to just $2.3bn.
New chief executive Peter Voser saw the firm’s production for the second quarter 2009 fell to 2,960 thousand barrels of oil equivalent per day against 3,054 thousand in the same period last year and 3,321 in the last quarter.
Voser, the firm’s former finance chief, warned that production capacity and costs were still too high in the industry.
He also warned of “massive” restructuring, which will lead to huge job cuts as the oil group battles against the biggest slump in energy demand since 1980.
Oil is trading at around $63 a barrel, after peaking at $147 a barrel in July last year.
Rival BP reported a 53 per cent drop in profit earlier this week, and launched a £1bn cost-cutting programme, on top of the $2bn it has already cut from the business.
Shell has cut operating costs by $700m during the first half of the year, and said yesterday it would cut capital spending next year to $28bn.
The company added it might freeze its dividend payout, but said in its second quarter earnings it would pay out $0.42 a share, up five per cent from last year.
Voser took over from Jeroen van der Veer earlier this month, and has begun a massive shake up at the company, starting at the top.
He cut 20 per cent of the top management, including Linda Cook, the head of Shell’s gas business.
Voser wants Shell to become more efficient, but declined to give numbers of job cuts to be made, saying only that they would be “substantial.”