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The Press Association: Shell set to show dip in profits

April 29, 2007

Anglo-Dutch company Royal Dutch Shell is expected to show the impact of falling energy prices when it publishes first-quarter results on Thursday.

Consensus market forecasts for the first three months of the year are for 5.56 billion US dollars ( 2.78bn), nearly 5% lower than last year’s 6.09 billion US dollars ( 3.31bn), despite predicted sales more than 7% higher at 82 billion US dollars.

The company has had to cope with a steep decline in oil prices from last August’s record levels, which saw BP’s first quarter profits decline by 17% last week.

The City will also be watching for updates on production levels – hit last year by attacks on pipelines in Nigeria – as the firm looks to find new sources of oil and gas. In February, Shell predicted production of between 3.3 million and 3.5 million barrels a day during 2007.

Charles Stanley analyst Tony Shepard said: ‘Over the next 10 years, production from traditional areas such as the North Sea and Oman are expected to decline further and output from unconventional fields such as gas to liquids and oil sands are expected to progressively increase.’

Earlier this month Shell said it would pay 180 million to shareholders in compensation in an attempt to draw a line under the crisis over the downgrading of its oil reserves three years ago.

Meanwhile the UK’s biggest pub group, Punch Taverns, is expected to deliver a strong set of figures next Tuesday as it unveils its interim results.

The group, which was founded by entrepreneur Hugh Osmond, is forecast to benefit from impressive food sales, driving up like-for-like performance. The analyst consensus is for profits before tax of 128.1 million, up 10.5% on the previous year’s interims.

Goldman Sachs said the average profit in the tenanted and leased estate should show improvements thanks to the recent disposal of 869 pubs to rival Admiral Taverns for 326 million. Punch, which replaced Gallaher in the FTSE 100 Index last week, said the money would be used to reduce its debt.

Goldman analysts said the move was also sensible ahead of the smoking ban in England, as the pubs that were offloaded consisted of those that were smaller and less profitable and largely drinks-focused venues, which are set to suffer more when the ban comes in this summer.

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