Royal Dutch/Shell Group undershot forecasts for third-quarter profits today, sending its shares down by as much as 3 per cent as a series of impairment charges hit earnings.
Profits in all key areas for the world's second-biggest oil group missed analysts' expectations, but gas and power were the biggest disappointment, analysts said. This segment took a net $239 million charge for impairment of US power sector assets.
Shell - the first of the world's top three oil firms to report figures for the quarter - said net profit adjusted to reflect the current cost of supply and other special items grew 16 per cent to $2.595 billion from $2.241 billion a year ago.
Analysts' forecasts ranged from $3.2 to $3.5 billion. It is rare for large oil companies to miss forecasts by such a large margin. Nonetheless, thanks to very strong oil prices, the profit figure was still among the biggest profits being generated by any company in the world and over the first nine months of 2003 was a record for the firm.
Shell shares were down 3.1 per cent at 374 pence by 10 a.m. Royal Dutch shares were down 2.2 per cent at €38.38 in Amsterdam. The DJ Stoxx European energy index, which includes both, was down 1.8 per cent.
Shell has been a poor share price performer among the world's top oil companies in 2003.
Sluggish volume growth, concerns about its rate of return and its move to suspend share buybacks this year has left its twin stocks down 5 per cent in 2003 so far compared with rises of 10 per cent of US rivals and a flat performance from its European peer group.