Shell reports surprise 9% profit rise
Oil giant Shell surprised markets today by reporting a 9% hike in profits as it began the battle to restore its battered reputation.
Underlying profits for the first three months of the year rose ahead of expectations to $4.25bn (€3.6bn) – despite the company seeing a decline in oil output.
Investors were also boosted by news that Shell will restart its share buyback programme, with around €2bn (€1.7bn) to be spent on buying its own stock in 2004. Shares were up 4% following the update.
Shell chairman Jeroen van der Veer said the performance had been delivered against the “extraordinary challenges” posed by the shock downgrades of its reserves in the quarter.
The group is being investigated by regulators on both sides of the Atlantic after announcing in January that its oil and gas stocks were 20% lower than previously thought. It has since restated its reserves a further two times.
The crisis has claimed the scalps of three of senior executives, including chairman Sir Philip Watts and the head of exploration and production Walter van de Vijver.
Both men were criticised in a report last week that revealed they had known since 2001 that reserves had been overbooked.
Shell said its profits performance over the past three months reflected sky-high oil prices and improved earnings in gas and power, oil products and chemicals.
There was also a gain of €742m (€1.11bn) on the sale of shares in Chinese energy giant Sinopec during the quarter.
Mr van der Veer said: “It is good to see that we have continued to deliver satisfactory results and cash generation despite all the issues relating to reserves.”
