Shell reports 70% dip in profits

Royal Dutch Shell has reported a 73% slide in profits between July and September

Royal Dutch Shell has announced a 70% slide in profits to 2.3 billion US dollars (£1.4 billion) in the period between April and June.

The Anglo-Dutch firm achieved profits of £22 billion last year, but, in line with BP on Tuesday, it said the weaker global economy had impacted its performance in the second quarter.

New chief executive Peter Voser said: "Energy demand is weak."

"There is excess capacity in the market, and industry costs remain high."

He warned that "substantial" staff reductions were likely this year as a result of the company's Transition 2009 programme, which Shell announced in June and is expected to be complete by the end of the year.

Shell has already reduced the number of senior management positions by more than 100, or 20%, and plans to merge two of the firm's three "upstream" exploration subsidiaries, which employ 22,000 staff.

The company did not provide further details on the plans, but said it had reduced costs by 700 million US dollars (£426.8 million) in the first half of the year.

Mr Voser said: "Looking beyond 2009, Shell needs to become a more efficient company, with faster decision-making, sharper implementation of strategy, and more focus on costs and value."

His comments echo those of BP counterpart Tony Hayward, who said this week the company's target for a reduction of two billion US dollars (£1.21 billion) in costs in 2009 had already been exceeded, with a further one billion US dollars (£607 million) saving expected over the rest of the year.

Mr Voser also shared the BP chief executive's view that there was unlikely to be a sudden pick-up in demand.