Shell results fail to impress

Despite rising profits, investors turned their back on Shell

Shares in Anglo-Dutch oil giant Shell have dropped 4% following the release of a set of disappointing financial results.

Despite the group announcing a rise in profits for the three months to September, City investors were less than impressed that earnings in all key areas were below expectations.

Profits rose to $2.6bn (£1.53bn), up 16% on the same period last year, but investors had been expecting profits to be at least $3.1bn (£1.8bn).

Gas and power was the biggest disappointment, as weak prices in the US forced the company to write-off $239m in order to reflect a fall in the value of its assets there.

Production warning

Meanwhile, earnings in its main oil and gas division were also below many forecasts.

Misgivings surrounding the firm were amplified by Shell's warning that it expects full-year overall production to dip 1%.

Finlay McDonald, fund manager at Britannic Asset Management said: "Shell's tendency to surprise on the downside is once again in evidence."

"Confidence in the management will not be helped by these numbers."

Sluggish growth

Shell has suffered from a poor share price performance throughout 2003, compared to other top oil companies.

Sluggish volume growth, concerns about its rate of return and its move to suspend share buybacks this year have seen its stock dip 5%, while its rivals in the US have risen 10%.

Jon Wright, an analyst at Smith and Barney, added: "The numbers aren't good...we'll be pulling back our forecasts for this year."

The rise in profits between July and September was also much less sharp than those seen earlier in the year. For the three months to June Shell reported a jump in earnings of 51%.

But the performance means Shell has already clocked up underlying profits of $9.85bn (£5.82bn) so far this year - 53% higher than it was at the same point in 2002.

By 1340 GMT Shell stood 13.68p lower at 372.32 on the FTSE 100, leading UK share index.