Understatement: Shell's chief executive,
Jeroen van der Veer, said the figures were
"satisfactory
Posted on 01/31/2008 6:19:16 PM PST by bruinbirdman
Royal Dutch Shell has been forced onto the defensive after its announcement of record profits sparked calls for a windfall tax and complaints from motorists about soaring pump prices.
While investors fretted about whether the $27.6bn (£13.9bn) profits based on the current cost of supply masked deep problems facing the world's second largest non-government oil company, Shell received a barrage of complaints that its earnings were "obscene".
Understatement: Shell's chief executive,
Jeroen van der Veer, said the figures were
"satisfactory
The annual profits, which were up 9pc, are a record for a European listed company and were driven by last year's soaring oil price, which averaged $90 a barrel for the last three months of 2007.
The company's chief executive, Jeroen van der Veer, said the figures were "satisfactory", but the Unite union and the AA motoring organisation said the government should skim off some of the oil giant's profits.
Unite joint general secretary Tony Woodley called the profits "obscene", adding: "Greedy oil companies should be asked to contribute for the common good." The AA said some of the windfall profits should be used to improve conditions for the motorist.
Mr Van der Veer pointed out UK Treasury taxes account for well over 50pc of the price of petrol at the pump, and that the vast bulk of the Anglo-Dutch company's profits were made outside Britain. Most of its earnings come from exploration and production, not from UK petrol sales.
The chief executive said big profits were needed to match big investment plans. "If you get additional taxation, in the end it means you can invest less. The money has to come from somewhere and over time it will impact on our production.
I think that you should not only look at the profits size, but at the size of the companies and the huge investment tasks we have to do for the future of our companies," he said.
Shell's profits in the fourth quarter were up 11pc at $6.68bn, but were still lower than most analysts' forecasts. The big rise in crude prices has helped cushion Shell against a 4.5pc drop in oil and gas production - a more than 10pc rise in the cost of labour and equipment - and a 40pc drop in refinery margins.
The loss of assets from the Sakhalin 2 project in Russia, and problems in Nigeria and Canada will continue to weigh on Shell this year, the company said.
"I'm modestly disappointed," said Jason Kenney, an analyst at ING. "The risk is to the downside with Nigeria. You've got a lot of unknowns on the horizon and refining margins are going to be quite low this year." From now on, said James Neale, of Citigroup, "Shell may find the going somewhat tougher."
Shell did not publish its reserves replacement ratio - the rate at which it is replenishing oil being pumped - but will instead release the data at the end of March. This has sparked concern that reserves data will be weak.
Shell said that 1bn barrels of resources were added in 2007, compared with more than 2bn in 2006. The shares closed up 2 at £17.91. A fourth-quarter dividend of 36 cents a share will be paid on March 12. Read
Evil company make 27 billion. Meanwhile, governments steal Trillions and waste most of it.
People can complain all they want. The real story is, although profits may seem high, margins are down because the cost of doing business has increased. So “profits” as they say are misleading.
the instand demand for a windfall profits tax was from a union....this news hit the UK this am. yes, this will give the class warfare new life all the way to Kalifornia.
The only thing obscene about those profits, is that ........ I’m not getting a couple million of them. ;^)
It’s sad when the gov’t get more than the oil companies.
Google’s Q4 profit was up 17%. Why is 9% profit growth at Shell “obscene” and 17% at Google not obscene?
This is a capitalist society. I’m a capitalist and I hate communists and socialists.
Good for Shell, bad for me because I WISHED I bought into Shell years ago (my cousin did, he’s loaded). My shares in Microsoft are up 13%, Yahoo is down etc, so I wish I could be happy for Shell because I don;t have part of the $$$ windfall BUT they simply have a service which we want which is oil.
I just wished they wouldn’t rub it in our faces though.
What they never publish is the % return on investment which is some of the lowest of any business and in most years doesn’t justify them remaining in business.
Then buy gas from the other 10 gas stations!
Oh, I know, they collude! No evidence of course.
Seriously, one complaint I saw said “Since all gas prices from competing stations were within pennies per gallon, we can only conclude that the stations were colluding.”
Of course, perfect competition gives you the same answer.
None of the oil companies are making enough return on investment to justify their remaining in business.
What was the percentage of sales?
How is the phrase “record profits” misleading?
I don’t mind the oil companys making record profits as long as the executives don’t skim them off in bonuses. The profits should be reinvested back into more drilling.
If everyone took their tax rebate and bought an iPod of iPhone, producing record profits for Apple, would such articles appear?
Would there be calls for a windfall profit tax?
No.
Some industries are just targeted for attacks.
Last time I checked, more profits means more taxes. I don't know about Shell, but Exxon-Mobil will make nearly $40 billion in 2007 after taxes. They will pay close to $30 billion in income tax. Anyone is entitled to a piece of this action - just buy a few shares and you're an owner.
Arbitrarily confiscating "excess profit" is an excellent way to destroy an economy. I suppose that if Shell's profits drop, then the government will make up the difference?
Endless complaints about CEO salaries and corporate profits, but no one seems to mind how much Oprah makes.
"A fourth-quarter dividend of 36 cents a share will be paid on March 12"
Thats a divident $1.44 a year on a $36 stock or a yield of about 4%.
There are many equities and bonds that have a higher yield.
yitbos
Because google donates lots of money to liberal politicians.
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