Shell quarterly profits slide

Royal Dutch Shell saw its profit collapse from $7.9bn last year to $2.3bn in the second quarter of this year, it told investors this morning. It suffered a perfect storm as the worldwide recession squeezed demand for oil and also the price of oil itself, meaning the oil giant, Europe's largest, had nowhere to turn.

The oil price was around $60 per barrel in the quarter against a peak last summer of $147 per barrel, hitting income and refining profits. The emphasis now at the group is cost-cutting and restructuring as it struggles to placate disgruntled investors. Chief executive officer Peter Voser said in the release: "Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery. Shell is adapting to this new situation and we must do more. We are sharpening our focus on delivery and affordability."

The company aims to build on cost-savings of $700m in the first half of the year, during which time it cut management posts by a fifth. It appears the net will now be cast more widely as the group warned of "substantial further staff reductions". It also said it will reduce capital spending - the lifeblood of oil exploration - next year from around $31bn this year ot $28bn next.

The results recalled BP's of two days earlier, but it was not all bad news - earnings came in ahead of analysts' poor expectations and the company upped its dividend by five per cent from last year.

WHAT THEY ARE SAYING:Jason Kenney of ING on Reuters: "Blow-out numbers considering the environment. This is a big positive for Royal Dutch Shell, it looks like the gas and power division is very good versus expectations." ·