Royal Dutch Shell to slash spending after loss of profit

Royal Dutch Shell PLC has vowed to further cut on spending after revealing a 58% drop in profits in this year's first quarter.

Shell´s downstream business also suffered with profits falling from $2.65 billion to $2 billion this year.

These are the first results Shell publishes since the acquisition of BG Group PLC earlier this year. The company said on Wednesday it will cut the spending capital by nearly 10% during 2016.

“Capital investment in 2016 is clearly trending toward $30 billion, compared to previous guidance of $33 billion, and some 36% lower than combined Shell and BG investment in 2014,” said Royal Dutch Shell Chief Executive Officer Ben van Beurden.

The company has also been offloading a number of assets in an effort to survive the current oil prices. During the quarter, Shell announced a conditional agreement for the sale of its 51% shareholding in the Shell Refining Company in Malaysia for $66 million.

Raymond, Market Analyst at XTB.com, says: “The cost cutting measures is necessary given the drop in earnings thanks mostly to low oil prices, which will likely remain under pressure until there is a move by OPEC to cut oil supply. Until then, the only thing RDS can do is optimise its margins and that means cost cutting, which was already underway following the acquisition of BG Group for $54bn.”