Shell undergoes overhaul as it reports fall in fourth quarter earnings

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LONDON (ShareCast) - - CEO announces restructuring
- Q4 and FY2013 earnings decline
- Dividend raised by 4.4 per cent

Royal Dutch Shell (Xetra: R6C1.DE - news) 's Chief Executive said the oil giant will undergo a major restructuring to boost capital and cut costs as the company reported a sharp fall in fourth quarter earnings.

Ben van Beurden, who took over the helm at the start of this year, announced plans to reduce investments, sell off assets and begin new projects in an effort to improve the group's financial position.

His remarks came alongside the firm's fourth quarter interim statement which showed earnings, on a current cost of supplies (CCS), fell 71% to $2.2bn from $7.4bn a year earlier. Full-year earnings declined 38% to $16.74bn.

The company's earnings were hurt by higher depreciation, increased exploration expenses, lower upstream volumes and weak industry conditions in downstream oil products.

In the fourth quarter cash flow from operating activities dropped to $6bn from $9.9bn and in the full-year dipped to $37.5bn from $40.4bn.

Capital (Other OTC: CGHC - news) investment for the fourth quarter was $16.3bn and divestment proceeds were some $0.5bn. For the full-year, the group made capital investments of $46bn and divestment proceeds were $1.7bn.

Shell (LSE: RDSB.L - news) has been criticised for spending too much in recent years and is under pressure to improve its capital.

"Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance", van Beurden said.

As part of its strategy to cut back on spending, the firm this week revealed it was selling its 23% stake in Brazilian project Parque das Conchas to Qatar Petroleum International for $1bn in an effort to raise cash this year.
The group also sold its 21% in its Mongstad oil refinery in Norway.

Shell will step up the pace of asset sales, which are expected to be $15bn for 2014-15 combined in Upstream and Downstream businesses.

"We are making hard choices in our world-wide portfolio to improve Shell's capital efficiency", van Beurden added.

Despite a challenging fourth quarter and year, the firm recommended a dividend of $0.47 per share, up 4.4% for the same quarter a year earlier.

RD

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