Organisation: Shell

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Analysis and commentary by Echo Research.

A bumper results season got into full swing last week with Shell's £9.8 billion earnings announcement, "Shell's £1m an hour profit"(Evening Standard, 3/2). Predictably, the large profit statement bought with it castigations for unseemly profiteering, calls for a 'windfall tax', and demands for greater social responsibility . "Britain is still suspicious of wealth creators", noted The Times (4/2). The Observer faced Britain's distaste for conspicuous wealth head-on asking, "at what level the profits cease to be obscene … If it [Shell] had just broken even, would it have been chaste? And would it have been virtuous to have gone into losses?"(Frank Cane, 6/2).

Ironically, while appearing "to be in rude health"(FT, 4/2), the company struggled to shake off the effects of a punishing year; a year in which the overstatement of reserves led to regulatory fines, loss of senior executives, restructuring, stock and debt-rating downgrades and a "lost reputation for good governance"(Guardian Leader, 4/2). While investor concerns will have been eased by Chief Executive Jeroen van der Veer's confidence in the future and the promise of £8 billion in dividends and share buy-backs, the market remained only too aware that Shell's long-term health needed not just record cash flow but "something in reserve"(FT, 4/2).