Shell has announced to the world that they are intending to shake up their business in America. The oil firm confirms that it intends to reduce its operation in America by up to a fifth of its current business operations.
This means the percentage, which is left, is going to be managed in smaller performance based segments and this will then be a guide as to the future performance in each area.
This recent change of events is the first major shakeup since the implementation of the new CEO, Ben Van Beurden, who moved into the top position in the company at the beginning of the year. Ben is not new to the company; he first joined in 1983 and has progressed in the company over the years, spending time at different locations worldwide before taking over his current role as CEO of the company in January 2014.
This means in terms of investment, Shell is reducing their portfolio in America by up to 20%, in reality this sounds larger than what it actually is bearing in mind of the current size of the company. Globally this company employs around 87,000 people. A 20 percent reduction in business in America might reduce the workforce but overall the job losses could be minimal. The amount of potential reduction in employment has not been released, but it could be a devastating blow for the American economy with any major firm reducing their position in America.
This current news is the first major shakeup since the new CEO took over, but the company has taken a fall in the amount of profit it has made, just $2.9 billion, these are the worst figures that the company has produced in the last five years.
Shell is a global company that is active in 70 countries around the world. They sell on average 33 million barrels of oil each year, which is produced in the 30 refineries that they own, dotted around the world to change the crude oil into products, which they can sell at their 44,000 service stations that they own worldwide.
This is a company that has to take a serious look at the accounts the company is producing, because last year they took a dive in the profits that the company made as a whole, to just $16.75billion.
Therefore, the performance of the company after the shakeup is going to be watched closely by the eyes of the financial markets over the coming year. It is going to be a challenging time, but one that should enable the company to turn around its poor profit margin and start to see growth in the market share that they dominate.
Caution is often associated with change, but with the changes that have been suggested, this could see the company making a complete change in their potential profits for the coming year. It is certainly an option to consider in the investing market, the potential that an increase in the profits could have on the value of the stock that is traded on the different stock markets around the world.