Shell's chemicals unit slumps to $182m Q1 loss on weak demand

29 April 2009 08:43  [Source: ICIS news]

LONDON (ICIS news)--Shell’s chemicals segment reported a loss of $182m (€138m) in the first quarter compared with earnings of $348m in the same period last year due to a slump in demand, the UK-based oil major said on Wednesday.

Sales volumes decreased by 21% to 4,294,000 tonnes compared with 5,459,000 tonnes in the first quarter of 2008, mainly as a result of reduced global demand, the company added.

The segment recorded a current cost of supply (CCS) loss of $74m compared with CCS earnings of $201m a year earlier.

The company said this reflected lower sales volumes, lower realised margins, lower income from equity-accounted investments and higher operating costs primarily due to non-cash pension charges.

Chemicals manufacturing plant availability was 92%, down from 95% in the first quarter of 2008.

“The reduced global demand for chemicals products has significantly impacted the chemicals manufacturing plant utilisation rate, which dropped to 64% from 86% in the first quarter 2008,” Shell said.

At group level, Shell’s profits dropped 62% in the first quarter to $3.49bn from $9.08bn during the same period last year. CCS earnings plunged 58% to $3.30bn on the back of weak upstream volumes and a slump in downstream demand.

"First quarter 2009 performance was affected by the weaker global economy, with a challenging upstream and downstream business environment,” said CEO Jeroen van der Veer.

“Industry conditions remain challenging, and our focus is on capital discipline and costs. We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape,” he added.

($1 = €0.76)

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By: Hilde Ovrebekk
+44 20 8652 3214

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