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Plans to axe 5,000 jobs in a belated attempt to shake up Royal Dutch Shell failed to prevent a slide in the shares of the oil supermajor — down 3% or 58p at 1853p — whose third quarter results today paled against a strong performance reported earlier in the week by BP.
Shell's third quarters had been expected to be a blood bath, compared as they are to record oil prices in the third quarter of 2008, which super-inflated Big Oil's profits last year.
In the event, Shell today reported profits of $3 billion for the July, August and September, a collapse of 72% on the third quarter of 2008.
While BP's results were similarly afflicted — down 50% year on year — BP's third-quarter results released on Tuesday showed that its production had significantly ramped by 7% during the summer months and that it earnings had grown from the second quarter of this year.
No such story was reported by Shell today, which said that not only was production flat at an average of 2.9 million barrels of oil a day but that on a clean reporting basis, third-quarter profits are down compared to the April, May, June trading period.
Stripping out exceptional items, Shell's third-quarter profits came in at $2.6 billion against $3.2 billion in the second quarter.
It is that underperformance that led new chief executive Peter Voser — in the job for four months — to reveal that not only has he cut 20% of his senior management team taking the number down from 750 to 600, he is cutting 5,000 non-operational jobs throughout the company.
That represents around 5% of Shell's global workforce of a little over 100,000, though it is the equivalent of one in 10 in the divisions affected.
The shake up at Shell comes around two years after the introduction of Tony Hayward's cost-slashing programme at BP that analysts said is responsible for its recent upturn in fortunes.
“Our third quarter results were affected by the weak global economy,” said Voser, the former finance director who take over from his boss Jeroen van der Veer in the summer. “Upstream and downstream profitability has been sharply reduced compared to year-ago levels.
“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.
“We have embarked on an ambitious programme of stringent measures to further improve our performance, focusing on improving our competitive cost position, simplifying Shell and increasing personal accountabilities.
“Our Transition 2009 programme is progressing well and will be completed by the end of 2009. Some 5000 employees are leaving Shell as a result of these changes.”
Shell however did score over BP in one area. It is raising its quarterly dividend to 42 cents per share — 5% higher than a year ago.
BP said it was keeping its quarterly dividend the same as last year, which because of foreign exchange movements, means the BP dividend in sterling terms is down 2%.
