Royal Dutch Shell said yesterday it would cut a further 1,000 jobs worldwide this year after reporting a 69% slide in annual profits to £6.1billion.
The Anglo-Dutch firm also reported a steep drop in fourth-quarter earnings, down 75% to £738million, after pressure on margins in refining offset a year-on-year increase in oil prices.
Shell has cut 5,000 jobs globally in the past year and said it would shed 1,000 in 2010, mainly in downstream and corporate functions, including refining and forecourt sales, to slash costs and make it more competitive against rivals such as BP.
Its business in Aberdeen, where it employs about 1,800, is the hub of its UK upstream – exploration and production – operations and less likely to be affected by cuts.
A spokeswoman said it was too early to comment on where jobs might go.
In 2008, Shell announced a local initiative in Aberdeen to “right-size” the organisation following the divestment of some late-life assets and to become more competitive.
About 250 people working in or out of the city received redundancy notices just before Christmas last year.
BP has moved ahead of its rival after chief executive Tony Hayward stripped costs out of the business and improved the group’s refining performance.
The gap was highlighted earlier week when BP said fourth-quarter profits had risen 33% to £2.16billion.
Shell chief executive Peter Voser said yesterday his company was making good progress in its efforts to become more efficient, adding: “We have reduced complexity in the company, and our new organisation, announced in July 2009, is now fully up and running.”
He admitted that trading conditions were tough in 2009 and were likely to remain challenging this year.
Mr Voser said: “Oil prices have increased compared to a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels.”
Shell said production had dropped by more than 2% in the year, extending a run of declining output seen since 2003. Mr Voser said: “Downstream is facing some tough times. There is a significant overhang of industry refining capacity, exacerbated by the economic downturn.”
He said restructuring plans would look to refocus Shell’s downstream operation into fewer, more profitable markets with growth potential.
Shell’s reduction in operating costs last year amounted to about £1.74billion compared with 2008 and the latest push will attempt to make further savings of £600million this year.
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