Dow Jones Newswires: Shell to significantly reduce costs to ensure capital position amid coronavirus

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Royal Dutch Shell PLC said Monday that it is taking measures with the aim of reinforcing its financial position due to the side effects of the coronavirus, which it said will contribute to a large amount of free cash flow on a pretax basis.

The oil giant RDS.A, +4.33% RDS.B, +6.44% RDSA, +4.08% RDSB, +7.67%  said that these actions are focused on reducing its expenses, including a $3 billion-$4 billion cut in underlying operating costs per year over the next 12 months, and reducing its cash capital expenditure to $20 billion or below for 2020 from a planned level of $25 billion.

The company should therefore generate between $8 billion and $9 billion of cash before tax, it said.

“In the current environment, Shell’s financial resilience is fundamental to continued investment in our strategic priorities,” Royal Dutch Shell said.

Regarding its divestment program of more than $1 billion in 2019-20, the company said that it is still committed to it but that the timing will depend on market conditions.

It also said that the board has decided to not go ahead with the next tranche of its share-buyback program following the completion of the current tranche.

“We will continue to review the dynamically evolving business environment and are prepared to take further strategic decisions and consider changes to the overall financial framework as necessary,” the company said.

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