Royal Dutch Shell Case Study Solution

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Royal Dutch Shell
Royal Dutch Shell declared its fourth quarter 2015 results 2 days ago on the 4th of February. The company reported earnings of $ 1.8 billion for the fourth quarter on a current cost of supplies (CCS) basis compared with $ 4.2 billion for the same quarter a year ago. Full year 2015 CCS earnings were down to $ 3.8 billion from $ 19.0 billion for the full year 2014. Excluding extra-ordinary items, the earnings for the quarter were $ 1.8 billion compared with $ 3.3 billion for the fourth quarter of 2014 while earnings for the year were $ 10.7 billion compared with $ 22.6 billion in 2014.
Cost Reduction:
Shell is pulling on powerful financial levers in response to the oil price downturn. It is maintaining a strong balance sheet by ensuring cash flow generation. It has also kept intact its ability to pay dividends and to keep a sensible and high-value investment program under way for the future. The company reduced its operating and capital cost by a combined $ 12.5 billion in 2015 while its operating costs dropped by $ 4 billion in the same period. Hence, the company has shown to its investors that it does have a very effective and sustainable cost-reduction program in place and it is working too. Moreover, Shell expects that its costs should further reduce by some $ 3 billion in 2016. On the capital investment
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The company divested assets for over $ 20 billion cash over the last 2 years beating its previous target of $ 15 billion set for the same period. The divestments are not going to stop here. The company has more of them in the pipeline the Showa Shell, Denmark marketing, and the sale of its shareholding in Shell refining company in Malaysia. All in all the company has plans to divest about $ 30 billion worth of assets for the period of next 2 years through 2018 including some from the BG Group would officially get acquired by Shell later this

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