Royal Dutch Shell reported on Wednesday its first-quarter earnings almost halved from a year ago to $4.5 billion mainly due to a $2.9 billion charge reflecting impairments related to refineries in Asia and Europe.
"The impairments we have announced today in downstream reflect Shell's updated views on the outlook for refining margins. There are substantial pressures on the industry from excess capacity, changing product demand, and new oil supplies from liquids-rich shales," chief executive Ben van Beurden said.
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He said Shell was in the process of divesting refineries in four countries: "I am determined to improve our performance in this business."
Without the one-off items, Shell's earnings were down 3 percent from a year ago to $7.33 billion with its upstream business posting a slight rise in earnings and downstream posting a drop. Shares traded 2.4 percent higher shortly after market open following the results.
Also on a positive note, cash flow increased to $14 billion from $11.6 billion in the first quarter of 2013 and $6 billion in the fourth quarter of 2013.
That allowed the oil major to announce a first-quarter 2014 dividend of $0.47 per ordinary share, an increase of 4 percent year-on-year.
The firm said first quarter upstream earnings were supported by stronger gas segment results, offset by the impact of exploration well write-offs, and higher costs and depreciation.
The first quarter saw new, profitable production from the deep-water Gulf of Mexico and Iraq, together with new LNG from the acquisition of Repsol's portfolio, it said.