Royal Dutch Shell shares rise despite full year profit plunging 80%

Despite Royal Dutch Shell posting an 80% drop in full year profit, the company's shares are up as investors knew last month what was coming and are eyeing up continued dividends.

The FTSE 100 oil giant company said full year profit dropped to $3.8bn (£2.6bn) from $19bn in 2014.

In the fourth quarter, profit was $1.8bn, up from a loss in the third quarter of £6.1bn but down from the profit in the last quarter of 2014 of $4.2bn.

Earnings from its upstream business were affected by lower oil and gas prices, however that was partly offset from lower costs.

The company also confirmed it will pay a fourth quarter dividend of $0.47 per share, and said it is expecting to announce a first quarter dividend at the same rate.

Royal Dutch Shell chief executive officer Ben van Beurden said the completion of the BG Group merger will rejuvenate the group.

“We are making substantial changes in the company, reorganising our Upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices,” he said.

“As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.”

CMC Markets' Michael Hewson said the results meet expectations as investors look for the dividend.

"This morning’s results from Royal Dutch Shell didn’t offer up too many surprises given that CEO Ben Van Buerden gave investors a “heads up” at the end of January," he said.

"As far as the dividend policy is concerned Shell is better placed to keep it at current levels in the short term, given its better dividend cover, while its debt levels have been falling relative to its peers since the end of 2013, which suggests that for now the 9% yield is probably safe."

Hargreaves Lansdown's Danny Cox noted the company is famous for its dividend track record.

"Half of Holland would keel over in apoplectic horror if Shell ever cut the payout," he said.

"The merger with BG, as the company points out, supports the dividend under "any expected oil price scenario".

"That's because BG's Brazilian and Australian projects have strongly rising production profiles and relatively low operating costs. "

Shell is promising that the dividend will be safe unless the unexpected happens. The company's A shares were up 61p (4.24%) to 1,499p at 0855 GMT, while its B shares were up the same amount to 1,498.5p.