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Royal Dutch Shell profits almost double

Second-quarter profits at oil giant Royal Dutch Shell have almost doubled after the firm completed a year-long corporate restructuring programme.

The firm reported profits of $4.5bn (£2.9bn) on a current cost of supplies basis, up from $2.3bn a year ago.

But it marked a drop from the $4.9bn it made in the first three months of the year as it continued to see “mixed signals” in the world economy.

Earlier this week, rival BP reported a record $17bn loss.

That included a provision of $32bn to cover the costs of its oil spill in the Gulf of Mexico.

In contrast to BP, who suspended dividends for the rest of the year, Shell said it would pay a second quarter dividend of $0.42 per share.

Excluding one-off items, Shell’s profit was $4.2bn, compared with $3.1bn last year.

Shell said that its restructuring programme had achieved cost savings of $3.5bn, beating its target by about 15% and some six months ahead of schedule.

It added that as a result of the changes, 7,000 employees would leave the company 18 months earlier than planned.

Shell also said it expected to sell $7bn-$8bn of assets in 2010-11 as it refocuses its portfolio on projects with higher growth potential.

“We continue to see mixed signals in the global economy,” Shell chief executive Peter Voser said.

“Oil prices have remained firm so far this year, but refining margins, oil products demand and natural gas spot prices all remain under pressure.

“Our earnings and cashflow have rallied from 2009’s lows, but the outlook remains uncertain.”

The price Shell received for its oil was 41% higher than the same period a year ago, while gas prices were 15% higher.

‘Focused strategy’

Richard Hunter, head of UK equities at stockbrokers Hargreaves Lansdown, said Shell’s update underlined the “stark difference in fortunes of the UK’s two oil majors”.

“Whereas its fierce rival BP has been the subject of forced introspection, Shell has continued to drive its own prospects forward,” he commented.

“Refining margins are improving, the restructuring programme continues apace and the proposed sale of assets will enable a more focused strategy in the future.”

BBC ARTICLE

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