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Updated from 2:37 a.m. EST



) --

Royal Dutch Shell


, Europe's second-biggest oil company behind


(BP) - Get BP Plc Report

, said fourth-quarter adjusted earnings fell to $2.8 billion from $3.9 billion a year earlier and the outlook for 2010 is "uncertain."

Analysts surveyed by Thomson Reuters expected Shell to report adjusted profit, which excludes items, of $2.87 billion.

Net income attributable to shareholders in the quarter was $1.96 billion, a reversal from a year-earlier loss of $2.81 billion.

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"Our fourth quarter 2009 results were impacted by the weak global economy," said Royal Dutch Shell CEO Peter Voser, in a statement. "Oil prices have increased compared to a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels. We are not assuming that there will be a quick recovery, and the outlook for 2010 is uncertain."

Voser said 5,000 employees will be leaving the oil company as it reduced underlying operating costs by about $1 billion in the fourth quarter.

Royal Dutch Shell said its downstream operations are facing "tough times." The segment reported a fourth-quarter loss of $1.76 billion, compared with net profit a year earlier of $561 million.

There is a significant overhang of industry refining capacity, exacerbated by the economic downturn. That's why we have initiatives underway to refocus Shell's downstream footprint into fewer, more profitable markets with growth potential, through disposals and selective growth investment," Voser said.

Earlier this week,

BP said it swung to a profit

in the fourth quarter as oil and gas production rose 4% and reserves increased.

-- Reported by Joseph Woelfel in New York.

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