- Cost-cutting target raised
- Investment spend trimmed
- Bigger buybacks and dividends
Energy giant Shell (SHEL) released a statement ahead of today’s Capital Markets Day outlining how it intended to ‘strengthen its commitment to value creation’ while maintaining a focus on performance, discipline and simplification.
Investors liked what they read, sending the shares up 50p or 1.8% to a new six-month high of £27.75.
BIGGER RETURNS TO COME
The company said it would increase shareholder distributions from 30% to 40% of through-the-cycle cash flow from operations to a range of 40% to 50%, continuing to prioritise buybacks while maintaining a 4% per annum progressive dividend policy.
This would be partly funded by raising its structural cost reduction target from $2 billion to $3 billion by the end of this year to a range of $5 billion to $7 billion by the end of 2028.
At the same time, greater capital discipline means the firm will aim to do more with less so it has lowered its spending target to a range of $20 billion to $22 billion per year from 2025 to 2028.
The sum of these actions is cash flow per share should rise by more than 10% per year through to 2030.
A CLEANER FUTURE
In contrast to other energy producers, Shell maintained the climate targets it set out in its 2024 Energy Transition Strategy as it aims to ‘deliver more value with less emissions’.
The firm will focus on growing its LNG (liquefied natural gas) sales by 4% to 5% per year through to 2030, reinforcing its market-leading position, while growing top line production across the Upstream and Integrated Gas business by 1% per year to 2030.
There was also a promise to make the group more resilient by growing its high-return Mobility and Lubricants businesses, scale up its lower-carbon platforms, where it expects to have 10% of its capital deployed by 2030, and unlock more value from its Chemicals business through partnerships and strategic deals.
‘We are transforming Shell to become simpler, more resilient and more competitive,’’ said chief executive Wael Sawan.
‘We want to become the world’s leading integrated gas and LNG business and the most customer-focused energy marketer and trader, while sustaining a material level of liquids production.
‘Today we are raising the bar across our key financial targets, investing where we have competitive strengths and delivering more for our shareholders.’
