Royal Dutch Shell, which vies with BP to be Europe's biggest oil company, laid out plans for 1,000 extra job cuts and savings of US$1 billion (Dh3.67bn) this year because of a "challenging" outlook for refining.
Shell, based in The Hague, will also cut staff bonuses from last year, despite having agreed on them, because they do not reflect the "overall competitive position".
The moves come as the Anglo-Dutch energy company reported that earnings excluding one-time items and gains or losses from inventories fell 28 per cent in the fourth quarter to $2.8bn from the same quarter in 2008.
Peter Voser, the chief executive who has placed 15 per cent of the company's refining capacity up for review, said he was not banking on a quick recovery and the outlook for this year was uncertain.
"We are taking steps to improve our performance," Mr Voser said, explaining that Shell had reduced costs by an extra $1bn in the fourth quarter, bringing total cost cuts for last year to $2bn.
"For 2010, we are targeting a further underlying cost reduction of at least $1bn and a reduction of some 1,000 employees," he said. Shell cut 5,000 jobs last year.
Shell will also reduce bonuses by 12 per cent, after the executive committee cut the company's bonus scorecard to 1.1 from 1.25, according to an internal Shell memo shown to Bloomberg.
The old figure "rightly recognises strong operational performance in many areas [but] it does not reflect our overall competitive position and the need for improvement", Mr Voser said in the memo.
"My executive committee colleagues and I have decided to adjust the result downwards."
Oil prices had their biggest annual gain since 1999 last year, keeping refining margins under pressure as the recession weighed on fuel demand.
"Refining is struggling a lot and it is worse than we had expected," said Gudmund Halle Isfeldt, an analyst at DnB Nor Markets.
Shell's fourth-quarter net profit stood at $1.96bn after a heavy loss of $2.81bn in the same period in 2008, when the global downturn cut worldwide energy demand.
BP, which said this week that the recovery would be "slow and gradual", posted net income of $4.3bn in the final quarter of last year. ExxonMobil, the largest US company, posted a fifth straight drop in quarterly profit this week to $6.05bn.
There is a "significant overhang" of industry refining capacity and about 560,000 barrels per day is under review, Shell said.
"Downstream is facing some tough times," Mr Voser said. "Cost focus is now embedded in our day to day operations."
The Shell chief is seeking to revive growth with new projects in Qatar, Malaysia and Brazil after output fell for a seventh year in 2009.
He said he was no longer pinning his hopes on Nigeria, where Shell's operations were plagued by militant attacks in recent years. Shell halted some flow stations in Nigeria this week after sabotage caused a pipeline leak. On Monday, the company announced an ethanol venture with Cosan SA Industria and Comercio in Brazil. Shell will contribute assets including 2,740 service stations and as much as $1.93bn to the 50-50 venture.
* with Bloomberg and Agence France-Presse
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
more from Janine di Giovanni
UAE currency: the story behind the money in your pockets
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Get inspired
Here are a couple of Valentine’s Day food products that may or may not go the distance (but have got the internet talking anyway).
Sourdough sentiments: Marks & Spencer in the United Kingdom has introduced a slow-baked sourdough loaf dusted with flour to spell out I (heart) you, at £2 (Dh9.5). While it’s not available in the UAE, there’s nothing to stop you taking the idea and creating your own message of love, stencilled on breakfast-inbed toast.
Crisps playing cupid: Crisp company Tyrells has added a spicy addition to its range for Valentine’s Day. The brand describes the new honey and chilli flavour on Twitter as: “A tenderly bracing duo of the tantalising tingle of chilli with sweet and sticky honey. A helping hand to get your heart racing.” Again, not on sale here, but if you’re tempted you could certainly fashion your own flavour mix (spicy Cheetos and caramel popcorn, anyone?).
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Company profile
Date started: January, 2014
Founders: Mike Dawson, Varuna Singh, and Benita Rowe
Based: Dubai
Sector: Education technology
Size: Five employees
Investment: $100,000 from the ExpoLive Innovation Grant programme in 2018 and an initial $30,000 pre-seed investment from the Turn8 Accelerator in 2014. Most of the projects are government funded.
Partners/incubators: Turn8 Accelerator; In5 Innovation Centre; Expo Live Innovation Impact Grant Programme; Dubai Future Accelerators; FHI 360; VSO and Consult and Coach for a Cause (C3)
THE SIXTH SENSE
Starring: Bruce Willis, Toni Collette, Hayley Joel Osment
Director: M. Night Shyamalan
Rating: 5/5
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
HWJN
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