THE HAGUE, Netherlands (
Royal Dutch Shell's
fourth-quarter profit drop of 75% mirrored the trend of big profit disappointments from the major oil companies, but Royal Dutch's profit freefall was far and away the largest.
profits fell 23% in the fourth quarter, while
Royal Dutch Shell profits plummeted to $9.8 billion from $31.4 billion in the prior year.
For the full year of 2009, Royal Dutch Shell's profits were down 70% as weak global demand and high inventory levels offset rising oil prices. Rival
reported a 45% drop in annual profits earlier this week.
Royal Dutch Shell CEO Peter Voser also said the refining business is stressed as too much capacity had been built up before the credit crisis took hold of the global economy. Shell is planning to sell up to 15% of its refineries.
Refinery weakness was also a key issue for Exxon Mobil in its earnings decline in the fourth quarter.
Royal Dutch Shell was down more than 2% in London on Thursday afternoon, and in the U.S. pre-market was also down by more than 2% on Thursday morning.
Royal Dutch Shell announced alongside the weak earnings that it would slash 1,000 jobs -- mostly from the weak refinery business -- an extension of 5,000 personnel cuts that Royal Dutch Shell announced in December and says will save the company $1 billion.
Royal Dutch Shell does not expect the situation to change dramatically any time soon, either. CEO Peter Voss announced the job cuts while saying that there will be no quick recovery and that the outlook for 2010 is uncertain.
Cost-cutting will continue to be a key for Royal Dutch Shell until the overall economic outlook and oil supply and demand dynamic changes.
-- Reported by Eric Rosenbaum in New York.
Follow TheStreet.com on
and become a fan on
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.