Recession? Your head!
Shell posted one of the biggest profits in history for a British company, revealing today that it made $31.4 billion (£22 billion) in 2008, up by 14 per cent on 2007.
The record profits — equivalent to £60 million a day — came as the oil giant admitted that it was being hit by the plunging crude oil price and weakening demand for oil and gas.
Profits in the fourth quarter of 2008 fell by 28 per cent to $4.8 billion, which was below City forecasts.
Although critics of oil companies, which have accused them of making windfall profits at the expense of motorists, are expected to seize on the record profit figure, City analysts are more concerned about the speed of deterioration in their finances since the oil price peaked last summer.
Jeroen van der Veer, the chief executive of Shell, who is attending the World Economic Forum in Davos, called the performance satisfactory given the pressure on demand for oil and gas because of the weaker global economy.
Shell shrugged off the decline in profits, pushing up the fourth-quarter dividend by 11 per cent to $0.40 a share and signalling plans to pay a first-quarter dividend for the current year of $0.42, up 5 per cent.
Peter Heijen, a Theodoor Gilissen Bankers oil analyst, said that although fourth-quarter earnings were slightly below expectations: "I think the most important thing was that they increased [the dividend] by 5 per cent, which is a sign that management has confidence in the business going forward at the current oil price.”
Mr van der Veer said: "Our strategy remains to pay competitive and progressive dividends, and to make significant investments in the company for future profitability. Industry conditions remain challenging and we are continuing the focus on capital and cost discipline in Shell.”
For British shareholders, the dividend increases will be significantly greater in sterling terms because of the weaker pound.
The profits were struck on Shell's preferred measure, the so-called current cost of supplies basis, which measures underlying performance.
In strict fair-value accounting terms, Shell reported a $2.8 billion loss for the quarter because of the dwindling value of its huge inventories.
Brent crude mostly traded in the range of $50 to $70 a barrel in the quarter, compared to the $70 to $90 range in the fourth quarter of 2007.
Since July 2008, when oil reached a record $147 a barrel, it has fallen sharply to a current price of $41.63.