Earnings Crash 32% At Royal Dutch Shell Plc

Royal Dutch Shell Plc (LON:RDSB) shocks the market with disappointing third-quarter results.

Mark Rogers

As the Head of The Motley Fool’s UK Investing Team, Mark approaches the stock market with the same old-fashioned business instincts and values that he honed growing up around the family business. An investor for 20 years, Mark specialises in unearthing top-quality under-the-radar investments in the small-cap market. He currently serves as Director of Investing for Motley Fool UK services and Managing Director of Motley Fool UK.

Published 31 October, 2013 11:13 am GMT

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The shares of Shell (LSE: RDSB) (NYSE: RDS-B.US) dropped by 5% to 2,160p in early London trade this morning after the FTSE 100 super-heavyweight revealed a worse-than-expected drop in its third-quarter earnings.

The oil giant’s profits fell 32% for the period to $4.5bn, as higher costs and lower volumes weighed on margins in both Shell’s upstream and downstream segments.

Compounding Shell’s woes this quarter were ongoing difficulties and securities issues at the company’s Nigerian venture, which suffered from weaker refining margins and provided lower dividends.

Shell chief executive Peter Voser added:

“The company is rich with new investment opportunities – in the next few quarters Shell’s capital discipline means we will need to make hard choices between the best new investment opportunities from this industry-leading portfolio.”

Reflecting similar comments from BP this week, Shell pledged to increase the pace of its asset sales, and hiked its interim dividend by 5% to $0.45 per share.

With a market cap of £137bn, Shell’s shares trade at 9 times their expected earnings, and offer a prospective dividend yield of 5.1%.