Shell cuts 1000 more staff as earnings plunge 69%

Royal Dutch Shell suffered more setbacks today as it posted full-year earnings down almost 70% and announced that 1000 more staff would have to go.

Shell's shares fell nearly 2% after it published results which analysts described as "disappointing" given the rise in the price of oil, although they were roughly in line with expectations.

Despite the oil price, Shell, along with BP and other big players, has been hit hard by the collapse in profitability in its refining operations, where customer demand for petrol and other refined products has fallen due to the economic downturn.

For the full year, Shell's profits before tax plummeted 69% from $31.37 billion (£19.64 billion) to $9.8 billion and 75% in the quarter from $2.99 billion to $1.18 billion.

Chief executive Peter Voser said the company had been subject to the "weak global economy" and declared: "Having been at Shell for 25 years this is the toughest refining environment I have known."

Chief financial officer Simon Henry added that while oil prices rose, the benefits were "more than offset by a lower natural gas price and poor refining margins".

Voser said that Transition 2009, his programme to cut 5000 staff and make savings of $2 billion, was complete but that "we simply have to do better". He said there would be further staff reductions of 1000 and he was aiming for savings of $1 billion over the next year. He said all employees were now clear about what they had to do "and the same applies to me".

Voser announced the closure of Shell's refinery in Montreal, Canada, saying it will be converted into a product terminal, and said the Perdido field in the Gulf of Mexico will come on stream early this year, producing 100,000 barrels of oil per day.

He said Shell spent $3.3 billion last year in exploration, which resulted in "10 notable new finds" and he expected to spend the same this year. He expected this year to be "much the same as 2009".

However, Peter Hitchens at Panmure Gordon was sceptical and said: "Shell clearly has a long way to gountil then, there is little reason to buy the shares."