Royal Dutch Shell issues profit warning

The oil titan is off over 2% after warning of a substantial drop in its anticipated profits.

In 2012 the firm made a profit of $27.2 billion, and now it expects full-year profits in 2013 to be just $16.8 billion. This large reduction prompted traders to sell the stock.

Over the past 12 months, the stock’s price has been stuck within the 2300p and 2140p range. 2013 wasn’t the greatest year for Royal Dutch Shell: the company sold off US assets in the shale gas industry, and it has plans to dispose of North Sea investments.

Shell’s CEO Ben van Beurden stated that the focus is now on ‘capital efficiency and on continuing to strengthen our operational performance’. The asset-stripping programme is a sign the firm is focusing on its more profitable units.

The company will release its fourth-quarter and final-year results on 30 January. Meantime, today’s decline in share price could provide a buying opportunity.

Royal Dutch Shell chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.