LONDON (Reuters) - Royal Dutch Shell's third quarter profits undershot analysts' forecasts on Thursday as weak refining profit margins, higher production costs and output stoppages in Nigeria weighed on its performance.
Third quarter earnings excluding identified items and on a current cost of supply basis came in at $4.5 billion (2.8 billion pounds) compared with a forecast range of between $4.9 and $5.1 billion, down from $6.6 billion a year ago.
Shares in the company fell 4.6 percent to 24.3 pounds by 8:13 a.m. Expectations had been high after better-than-forecast BP results on Tuesday.
Chief Executive Peter Voser, who steps down from the western world's number three oil company at the end of the year, said actions taken on costs and shareholder payouts during the year so far "underline our commitment to shareholder returns", echoing an industry theme for the quarter as the sector underperforms the broader market and investors fear rising costs will eat into capacity to pay dividends.
World number one Exxon Mobil reports results later on Thursday.
The big drop in Shell profits was led by the significantly weaker industry refining conditions, that have been widely flagged by the company and others in the industry.
But rising costs in both production and finding operations in the main oil and gas division were also a major factor along with production impacts from maintenance and asset replacement activities.
The fall also reflected the impact of pipeline outages in Nigeria, much of which Shell puts down to sabotage and theft, and lower dividends from an Liquefied Natural Gas (LNG) venture.
Nigeria outages cost Shell 65,000 barrels a day worth of production. Total oil and gas output for the quarter was 2.931 million barrels of oil equivalent, down 2 percent on third quarter 2012 figures.
On the upside, Shell benefited from higher contributions from chemicals and increased production of LNG - an industry it has bet much of its future on.
Voser surprised investors by announcing an early retirement from his role earlier this year. He will be replaced by Ben van Beurden in January.
Shell will pay a dividend of 45 U.S. cents for the quarter, unchanged from the second quarter but up 2 cents from a year ago.
Reporting by Andrew Callus; Editing by Sinead Cruise and Elaine Hardcastle