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The oil giant has been badly hit by the ongoing slump in oil pricesiStock

Royal Dutch Shell has revealed its fourth quarter profit to December 2015 was badly hit by the ongoing slump in oil prices, although the group moved to quell fears over its annual dividend on 20 January.

Shell, based in the Hague, said fourth quarter profit adjusted for one-time items and inventory changes are expected to be in the $1.6bn to $1.9bn range, compared with $3bn a year ago. This was driven sharply lower by a decline in oil prices, which has seen crude lose 75% of its value over the past 18 months and fall by a quarter since the turn of the year. Shell said production remained on track throughout the year, averaging 2.9 million barrels of oil equivalent per day.

Shell indicated its 2015 dividend will be $1.88 per share, flat from the previous year, while its dividend in 2016 will be at least that amount. The group said it was taking steps to refocus and reduce capital spending, with its capital investment for 2015 expected to be approximately $29bn, 20% lower year-on-year.

Royal Dutch Shell is buying sector peer BG Group in what is the largest oil industry deal for almost a decade. It said the takeover will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as the streamlining and integration process of the two companies continues.

Meanwhile, the group said full-year current cost of supply earnings excluding items is expected to be in the region of $10.4bn (£7.3bn, €9.5bn) to $10.7bn – just over half the $19.04bn it reported in the corresponding period in 2014.

The net charge on identified items for 2015 is forecast to be between $6.80bn and to $7bn, the group added, indicating cashflow from operating activities for the 12 months to the end of December 2015 is forecast to be within the $29.2bn and $30.4bn range.

"I'm pleased with Shell's operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness," said group chief executive Ben van Beurden.

"Bold, strategic moves shape our industry. The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns."