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The Press Association: Shell expecting profits rise

26 January 2008

Market sentiment will be tested when the City’s full-year results season kicks off with figures from Royal Dutch Shell and AstraZeneca.

Royal Dutch Shell is expected to reveal full-year profits of more than 26 billion US dollars (£13.2 billion) on Thursday despite a tough end to 2007 for the oil major.

Consensus forecasts put fourth-quarter earnings at 5.82 billion US dollars (£2.95 billion) as higher operating costs and lower refining margins bite, even though oil prices soared to 100 dollars a barrel. This would leave full-year earnings at 26.65 billion US dollars (£13.5 billion), 5% ahead of 2006.

Shell has ratcheted up capital spending to seek out new sources of oil and gas since the reserves scandal of 2004, with chief executive Jeroen van der Veer’s selling off maturing assets to “rejuvenate” the oil major’s portfolio. But analysts predict production will be at the lower end of its guided 3.3 to 3.5 million barrels of oil equivalent a day.

Amid tougher times for the company Shell is looking to trim around 3,200 jobs in cost-cutting moves by outsourcing swathes of its IT infrastructure services division. Consultations with workers affected are under way with the new arrangements planned for July 1.

Meanwhile, drugs giant AstraZeneca also unveils 2007 results on Thursday with profits under pressure from patent challenges to its top-selling treatments. The company’s three leading products are facing competition from rival manufacturers looking to market generic copies.

Sales of heartburn drug Nexium – AstraZeneca’s biggest seller – could have fallen 8% in the final quarter of last year, analysts at Dresdner Kleinwort predict, as the company drops prices to build market share.

Its two other main drugs, Seroquel for schizophrenia and Crestor, which helps lower cholesterol, are also under threat from copies. Sales of Toprol-XL, a treatment for angina, heart failure and high blood pressure, dived 43% in the third quarter, after generic competition launched in August.

Consensus forecasts put full-year profits at 8.2 billion US dollars (£4.17 billion), 4% below the previous year. Other costs shouldered by AstraZeneca this year include the integration of its 15.2 billion US dollars (£7.6 billion) acquisition of US-based vaccines manufacturer MedImmune.

The firm announced plans to cut 3,000 jobs a year ago and is expecting restructuring costs in the region of 900 million US dollars (£457 million) this year.

http://ukpress.google.com/article/ALeqM5hAjHMn-3pwZAc4o3MX07B_dE4m2Q

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