Third-quarter figures out yesterday from Royal Dutch Shell saw the oil major stealing a march on its arch-rival BP. Third-quarter profits were down 8 per cent to $6.39 billion but, considering that the industry is suffering from a slump in production volumes and trading margins, the fall was less than the City had been expecting.

Shell’s profits fall compares with BP’s 27 per cent fall in underlying third-quarter profits revealed earlier this week, a result that Tony Hayward, BP’s new chief executive, admitted was “dreadful” as he revealed plans to cut 10 per cent of the company’s North Sea workforce, the core of the company’s legacy business before it expanded into the US, Russia and Nigeria.

Andy Inglis, head of exploration and production at BP, explained that the cuts were needed to simplify the way the business is run and would ensure better “frontline delivery”.

Jeroen van der Veer, Shell’s chief executive, may have been making a thinly veiled side-swipe at his British rival when he said yesterday that Shell’s results were “underpinned by operating performance,” adding that the company was continuing to “rejuvenate” its old reserves and launch new refining and natural gas reserves.

Comparison with BP flatters Shell and underlines how effectively it has recovered in the three years since it admitted it had overstated its proven reserves by 20 per cent. Over the past two years, as Shell has cleaned up its act, investors who own both oil stocks have looked for stronger capital gains by going overweight in Shell and underweight in BP.

This week’s third-quarter figures seem to have rewarded that strategy.

Shell’s so-called clean net income – profits excluding exceptional gains – came in at $6.1 billion, some 9 per cent above City forecasts, the sixth consecutive time the company has beaten broker expectations.

Adjusting for nonoperating items net income was $6.13 billion, a 13 per cent fall on last year.

But the record oil prices meant that bottom line profits rose by 16 per cent to $6.9 billion allowing for a 14 per cent rise in the quarterly dividend payout. For the whole quarter Shell returned $3.7 billion to shareholders via dividends and buybacks.

Shell shares added 13p yesterday to £20.59. The shares have gained 18 per cent in six months and now trade on a multiple of 8.3 times projected earnings for 2008. BP shares trade on a multiple of 7.5 times next year’s earnings.

However, this might just be the turning point for BP, similar to the business transformation Shell began three years ago. Shell should remain a core holding for any oil sector investment but investors may want to take profits there and buy into a long-term growth story at BP under its new leader.

Hirco

Hirco raised £350.8 million when it made its AIM debut in December last year, benefiting from a hunger among UK investors for Indian assets in bricks and mortar.

Yesterday Hirco said that it had invested £96.6 million to create a housing and shopping village covering 280 acres of Bombay, catering to the rapid growth of the affluent middle classes in the financial capital of India.

With earlier deals signed for Madras, Hirco has invested all but 3 per cent of its funds raised and all ahead of schedule. Investors were sold on the idea that the boom in Indian real estate had years more to run and the company could trust its money to projects sourced by the Hiranandani family, one of the sub-continent’s wealthiest and savviest property development clans. The Hiranandani family owns a 7 per cent share of Hirco.

However, investors who bought at the flotation price of 500p have been disappointed. The shares traded at a discount on the first day and yesterday were languishing at 370p as Hirco, like many Indian property floats from last year, suffered from a glut of short-term investors looking for a quick gain.

Figures last month showed that new flats at a Hirco project in Madras sold for 22 per cent more than equivalent sales on the same site in July. Indian property prices are still rising. The Hiranandani family stake ensures that they are in for the long term. Other investors should take the same view. Buy.

Blacks Leisure

The torrential rain that drenched shoppers this summer was always going to be good news for one high street retailer, and half-year figures from Blacks Leisure proved as much by revealing encouraging sales growth at Millets, its other branded chain.

Cost inflation is just 1.9 per cent, net debt has fallen £6 million to £600,000 and the margin at the Blacks Leisure and Millets stores in May-to-August was 90 basis points higher.

However, the figures were significant for far more than the group’s success in shifting wellies and waterproofs. After months of speculation, Blacks has decided to keep Freespirit, its snowboarding and surfing business. It has also bought the rights to Mambo, the trendy leisurewear brand, in Europe.

Mike Ashley, the Sports Direct tycoon who owns 29 per cent of Blacks, had threatened to oust the board if Freespirit was sold. Blacks said yesterday that it was now “in synch” with its shareholders, which may assuage any short-term worries over rifts with Mr Ashley. But he remains on the share register, so bid speculation is unlikely to die down.

The dividend was cut as expected, and the shares are trading on a relatively pricey multiple of 27.1 times forecast earnings. However, Blacks has underperformed the market by 22 per cent and the sector by 16 per cent in the past three months. Hold ahead of possible bid activity.

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