Royal Dutch Shell (NYSE:RDS.A) Earnings Plunge By 56%

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Royal Dutch Shell plc (ADR) (NYSE:RDS.A)

Royal Dutch Shell plc (NYSE:RDS.A) reported today that its earnings plunged 56% to $1.8 billion in the fourth quarter from $4.2 billion last year. On an adjusted basis, the earnings would have dropped 44%. The company’s oil production witnessed a 5% fall in the fourth quarter and excluding divestments impact, it would have been in line with the preceding year.

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Gains from Downstream

Royal Dutch Shell said that its earnings excluding special items, gained from the strong results of its downstream division reflecting the steps initiated by it to enhance its bottom line. As far as the upstream is concerned, earnings were affected by the considerable drop in oil and gas prices, partly compensated by lower costs. The company indicated that its integrated gas contributed more due to enhanced trading performance apart from the strengthening Australian dollar on deferred tax matters.

The oil firm’s total revenue and other income plummeted 36.1% to $60.18 billion from $94.17 billion in the previous year. On a sequential basis, it represented a 13% drop. The revenue and earnings reflected the weak global oil price in the fourth quarter compared to the preceding year. This quarter the company will likely face a similar situation.

Shell disclosed that its net cash from operating activities plummeted to $5.4 billion from $9.6 billion. Its debt grew to $58.4 billion at the end of the fourth quarter from $55.6 billion at the end of the third. However, its cash and cash equivalents remained at the same level of $31.8 billion. The company disclosed that it issued debt worth $5.0 billion in the fourth quarter under American regulations.

Royal Dutch Shell’s capital investment fell 18.6% to $7.9 billion in the fourth quarter from $9.7 billion. The reduction involved both the Upstream and the Downstream. The company announced a 47 cents a share dividend for the fourth quarter for ordinary shares. For the American depository shares, the company will pay 94 cents. Shell expects to maintain the dividend rate this quarter.

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