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Royal Dutch Shell posted a 70 percent fall in net profit in the second quarter, as oil prices and refining margins tumbled, but foreign exchange gains helped the oil major beat forecasts.
The world's second-largest non government-controlled oil company by market value said on Thursday second-quarter current cost of supply (CCS) net income, which strips out unrealized gains or losses related to changes in the value of fuel inventories, was $2.34 billion.
Excluding one-off items, Shell's [RDSA-LN Loading... ()] result was $3.15 billion, compared with an average forecast of $2.55 billion in a Reuters poll of eight analysts.
"Blow-out numbers considering the environment. This is a big positive," said Jason Kenney, oil analyst at ING.
Chief Executive Peter Voser, who took office earlier this month, gave a sombre outlook for energy demand and prices, and promised to adapt to the tough environment by slashing costs.
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"We are not banking on a quick recovery," Voser said in a statement.
Hague-based Shell [RDSB-LN Loading... ()] said it achieved $700 million in cost savings in the first half of the year compared with the same period in 2008.
Since July 1, the company has cut 20 percent of senior management positions and said there would be "substantial further staff reductions."
The Anglo-Dutch oil major said its capital investment budget would fall 10 percent next year to $28 billion. It did not give a reason, although industry costs are falling, after doubling since 2004.
The main outperformance versus analysts' forecasts was in Shell's Corporate division, which benefited from foreign exchange gains of $379 million, compared with a gain of $27 million in the same period of 2008.
Shares in Shell closed 0.8 percent higher.
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