The seemingly counterintuitive movement in the share price was due to a combination of low market expectations, the relative weakness of Shell’s peers and the announcement of 10,000 job cuts.
Shell had already warned the market its profits would be down significantly, mainly due to the ongoing oil price slump, while BP’s profit slide has been significantly worse.
A number of other cost saving were also announced, including the shelving of expensive projects in Nigeria and Canada.
The rise in the company’s shares helped drag the FTSE 100 upwards, with the index 1.4% higher at 5918 by mid-morning.
Royal Dutch Shell Chief Executive Officer Ben van Beurden was upbeat, and heralded the completion of the BG Group takeover as a reason for optimism.
“The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns,” he said. We are making substantial changes in the company, reorganising our Upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.”
“Pessimists out there might point towards the collapse of Shell’s fourth-quarter profits by some 44%, however the bulls have more to gloat about,” said IG analyst Alastair McCaig. “With major competitor BP seeing its profits collapse by 91% Shell can chalk that up as a comparative win.”
