Shell's missed Q2: Citi analyst worry with cash flow vs capital expenditure & dividend..
Shell said profits slid to $4.6bn, from $5.7bn a year ago. The news sent shares down 5.4 per cent in early afternoon London trading to £21.18.
The results highlight the challenges facing new chief executive Ben van Beurden, as he gears up to replace outgoing boss Peter Voser at the start of next year. At the top of the list is the poor performance of its North American business, which suffered a loss in the quarter and is expected to remain in loss for the rest of 2013 and possibly longer.
Analysts were also worried about the fall in operating cash flow, which was $12.4bn compared with $13.3bn a year ago. Citi analysts said Shell’s first-half cash flow, pre-working capital, was “insufficient” to fund both planned capital expenditure and the dividend.
Mr Voser said Shell’s profits had been hit by higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria. But even setting aside those factors, the results were “clearly disappointing for Shell”, he said.
Shell said the results also reflected the impact of the weakening Australian dollar on a deferred tax liability. They were also affected by higher operating expenses and depreciation as well as the increased exploration well write-offs.
But Mr Voser singled out the deteriorating operating environment in Nigeria, where oil theft and disruptions to gas supplies were causing widespread environmental damage and could cost the Nigerian government $12bn in lost reven Less