Higher margins boost Shell Q2 earnings by 42%

26 July 2007 07:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Shell on Thursday reported a 42% year-on-year rise in second-quarter chemicals earnings on improved margins and higher profits from investments.

The Anglo-Dutch major’s earnings after adjustments for the current cost of supplies (CCS) for the chemicals segment jumped to $494m (€360.6m) in the second quarter despite higher operating costs from $348m in the same period a year earlier, it said in a statement.

The segment’s strong performance was reflected in its first half CCS earnings, which has nearly doubled to $974m from the same period in 2006.

In the second quarter, Shell’s chemicals earnings was boosted by improved margins and higher profits from equity-accounted investments, namely its Nanhai joint venture cracker complex in China, it said.

Sales volumes fell 4% to 5.7m tonnes in the second quarter mainly because of a reduction in sales of lower margin products, including aromatics trading, it added. Chemicals manufacturing plant availability remained strong at 92.6%, some 2 percentage points lower than in the second quarter 2006, it said.

Second-quarter chemicals earnings included net charges of $30m related to restructuring of employee retirement plans in France partly offset by a cut in deferred taxes in Canada arising from reduced tax rates, Shell said.

"We are rejuvenating our portfolio, with sustained investment in new legacy assets, as well as disposals, both upstream and downstream," Shell CEO Jeroen van der Veer said.

"We continue to see competitive growth opportunities based on our technological strengths, by making disciplined capital choices, in an industry landscape of both higher energy prices and higher costs."

At group level, Shell’s second-quarter CCS earnings rose 20% to $7.6bn.

($1=€0.73)

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Author: Florence Tan
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