Business

Royal Dutch Shell profits hit by refinery writedowns

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Oil giant Royal Dutch Shell has reported a 44% drop in first-quarter profits after it wrote down the value of refineries in Asia and Europe.

Shell said profits fell to $4.47bn (£2.7bn) from $7,95bn a year earlier.

However, stripping out the impact of one-off charges, Shell said underlying profits fell just 3% to $7.33bn - beating analysts' expectations.

Shares in Shell jumped about 4% in response, also boosted by news of a 4% rise in its first-quarter dividend.

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The stronger-than-expected underlying figures were helped by a better performance from its upstream division - which covers exploration and production - most notably in its gas division.

Refining pressure

Shells recorded charges of $2.9bn in the first quarter of the year, $2.3bn of which was related to its writing down of the value of refineries.

Chief executive Ben van Beurden said the impairments reflected the firm's "updated views on the outlook for refining margins".

"There are substantial pressures on the industry from excess capacity, changing product demand and new oil supplies from liquids-rich shales."

Mr van Buerden added that Shell was in the process of selling refineries in four countries.

Shell issued a profit warning in January and Mr van Buerden - who became chief executive at the beginning of this year, taking over from Peter Voser - pledged to improve the oil giant's results.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Shell's latest results had been "well received".

"A busy divestment programme is in train, cash generation remains high, cost savings and further financial efficiencies have been identified, whilst the contributions from Shell's gas businesses in particular were robust," Mr Hunter said.

On Tuesday, rival BP reported a 23% drop in profits to $3.22bn for the first quarter of the year.

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