Shell ups cost saving target

By THIS IS MONEY
Updated:

 

Oil giant Royal Dutch/Shell Group has raised its target for year on year cost savings to $4 billion by 2001 from the 2.5 billion plan announced a year ago. Shares in the group jumped as its annual strategy presentation to analysts also said it was considering a 'multi-year' share buyback programme.

At 1010, Shell shares were ahead 5.27% at 499 pence. A year ago Shell's strategy announcement hit the headlines as it reacted to desperately weak oil prices and low downstream margins with a savage cost cutting and disposals programme. Wednesday's presentation said two thirds of the work involved was now done. 'Actions to strengthen the portfolio announced so far involve some $12 billion of capital employed of which eight billion has been contracted or completed', it said.

Some $1.8 billion worth of annual cost savings are already in the bag, it said. Six months ago just $450 million worth had been found. Total proceeds from planned disposals that include 40 percent of its chemicals business will be 12 billion by 2001, it said. Shell said it was maintaining its target for Return on Average Capital Employed (ROACE), a key performance measure, at 14 percent by 2001 assuming $14 per barrel oil prices.

It also stuck to its capital investment programme of $10 billion a year.

©>Reuters

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