AMSTERDAM: Royal Dutch Shell reported worse than expected fourth-quarter results after booking $500m of impairments but the Anglo-Dutch group said it was making progress towards recovery from a two-year downturn.
Earnings on a current cost of supply basis, the measure most closely watched by investors, fell 44 per cent to $1.03bn, from $1.84bn in the same period last year.
Excluding exceptional items, earnings were up 14 per cent at $1.8bn, from $1.6bn a year ago. However, this was well below analysts’ consensus forecast for $2.79bn. Shell said the $500m impairment mostly related to the impact of a weakening Australian dollar on a deferred tax position.
The results will disappoint investors who hoped for a stronger show of momentum on the back of higher oil prices and continues the choppy performance by Shell since its $50bn takeover of BG Group completed last year.
Ben van Beurden, chief executive, pointed to improving cash flow of $9.2bn in the fourth quarter, compared with $5.4bn in the same period last year, as a sign of progress.
A fall in net debt, which ended the year at $73bn, compared with $78bn three months earlier, was another positive. But this remained three times higher than at the end of 2015, highlighting the strain placed on Shell’s balance sheet by the BG deal as well as long-running weakness in oil prices.
