Thursday, May 6, 1999 Published at 10:08 GMT 11:08 UK
Business: The Company File
Shell - no longer the biggest oil company
Profits at oil giant Royal Dutch Shell fell by half-a-billion dollars in the first three months of this year.
The profits dropped to $1.4bn (£860m) from $1.95bn the previous quarter, on an adjusted basis.
The company blamed lower crude oil prices and reduced margins at its chemical and refining operations for the decline.
Nevertheless, the figures were better than expected by analysts, who forecast profits of between $900m and $1.2bn.
As a result, shares in Shell rose on the London Stock Market by 21p to 465p in early trading.
Shell chairman Mark Moody-Stuart said he was 'quietly confident' about Shell's future prospects.
The group said it had made progress in the $2.5bn cost cuts programme embarked on at the end of 1998.
Shell plans to sell 40% of its chemicals operations as part of that programme, and said "active marketing" of these assets was starting in the second quarter.
The Anglo-Dutch company, once the world's second largest oil company, has been put under pressure by the merger of BP and Amoco, and Exxon and Mobil, who have formed much larger rivals.
It has been forced to slash capital spending in half, and is planning to spend only $1.7bn this year compared to $3.8bn last time.
The company is also planning to cut thousands of jobs, including hundreds in the UK, where it is closing the Shell Haven refinery and scaling back on its North Sea operations.
Oil price woes
The price of oil has begun to recover from its low in the winter of around $10 a barrel, but the move has come too late to affect Shell's profits this time.
Shell has also been hurt by its greater reliance on downstream operations, such as refining and petrol stations, than other oil companies.
The global economic slowdown has led to the emergence of worldwide refining overcapacity. One of the leading rivals to Shell in the bulk chemicals business, ICI, decided to exit that business entirely.
Shell said it has no plans for a merger of its own.
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