Shell’s (NYSE: RDS.A) fourth quarter-profit tumbled almost 60% to $1.8 billion down from $4.2 billion a year earlier, on a current cost-of-supplies basis—a number similar to the net income that U.S. oil companies report. Its profit for the year dropped 80% to $3.8 billion, compared with $19 billion in 2014.Royal Dutch Shell PLC Thursday reported its worst profits in over a decade and said its reserves of oil and gas were depleting as a hefty decline in global oil prices continued to hammer the energy industry’s earnings.
Shell announced dividend of $0.47 per ordinary share and $0.94 per American Depositary Share (ADS). The dividend rates are expected to remain same during (1QFY16) despite a weak crude environment. Total dividends distributed in the quarter were $3 billion. CEO Shell Ben Ven Beurden seemed highly optimistic on future prospects, and seemed impressed with its gearing ratio — which only rose 1.8 percentage points to 14%.
Shell managed to outperform its industry peer, BP plc, in the quarter. BP reported a 91% YoY decline in profit compared to Shell’s 44%. The company plans to cut costs by reducing capital expenditures and laying off 10,000 workers in 2015-2016.
By the way, the Shell-BG merger secured approval by a huge margin of shareholder votes. The companies are expected to be integrated on February 15 at the earliest. Shell’s merger with BG cost a lot of cash which is going to hurt its cash flow. However, taking advantage of this harsh winter for a lower merger cost whether will help the company thrive in the future is still unclear.