By Ed Crooks, Energy Editor
Published: April 29 2009 08:17 | Last updated: April 29 2009 08:46
Royal Dutch Shell followed rival energy group BP in reporting a sharp fall in profits for the first quarter but exceeding analysts expectations.
Net profit after tax, adjusted to remove the effect of changes in the value of inventories, fell to $3.3bn (£4.85bn) from $7.78bn in the equivalent period of 2008, Shell said on Wednesday.
That was a fall of 58 per cent, in line with the 62 per cent drop reported by BP on Tuesday. The price of crude oil has plunged from an average of about $90 in the first quarter of 2008 to about $40 in the equivalent period of this year.
Shells profits were also well ahead of the average of analysts forecasts, which was about $2.6bn.
The figures also show that Shell is failing to cover its capital spending programme and its dividend payments from its income. Cash flow from operations was $7.9bn, while capital spending was $7.1bn and dividend payments were $2.4bn a shortfall of $1.5bn.
As a result, Shells debts have been rising. Gearing, measured in terms of net debt as a proportion of capital employed, rose to 6.6 per cent by the end of the quarter from 1.9 per cent a year ago. Shell has said it expects the figure to rise to the low 20s by the end of the year, as it maintains a capital spending programme that it has said it expects to be worth $31bn-$32bn in 2009.
The group has said it plans to raise its dividend this year, and increased its first-quarter payment by 5 per cent to $0.42, as it promised earlier in the year.
Most of the decline in profits came in the exploration and production business, where profits fell to $1.7bn from $5.1bn.
In oil products, including Shells refineries, profits held up much better, falling to $1.09bn from $1.19bn.
The business operating in Canadas high-cost oil sands made a loss of $42m, compared to a $249m profit in the first quarter of 2008.
Jeroen van der Veer, Shells chief executive, said the company was continuing to invest for the future.
Industry conditions remain challenging, and our focus is on capital discipline and costs. We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape, he said.
Shares in Shell were 0.7 per cent higher at £15.21 in early London trading.
EDITORS CHOICE
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Copyright The Financial Times Limited 2009
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
