Shell PLC on Thursday maintained the pace of share buybacks despite weaker-than-expected fourth quarter earnings, which reflected write-offs in its oil exploration business and lower oil prices.
The London-based oil major said fourth-quarter revenue declined 17% to $66.81 billion from $80.13 billion a year prior. Pretax profit, however, shot up to $4.21 billion from $1.64 billion.
For the whole of 2024, revenue faded 11% to $289.03 billion from $323.18 billion, while pretax profit fell 8.3% to $29.92 billion from $32.63 billion.
In the final quarter, adjusted earnings were 39% lower at $3.66 billion, shy of the Vara-cited consensus of $4.10 billion. Annual adjusted earnings were down 16% at $23.72 billion, also below the consensus of $24.11 billion.
The fourth quarter included net impairment charges and reversals of $2.2 billion, and net losses related to sale of assets, higher than $1.3 billion in the third quarter.
‘As expected, Shell reported 4Q results this morning which showed relatively soft earnings but continued strong cash generation, with a small miss at net earnings, driven by the downstream segment, with a larger loss than expected in Chemicals, and weaker oil trading weighing on refining results,’ commented RBC Capital Markets analyst Biraj Borkhataria.
Despite the lower earnings, Shell said 2024 was ‘another year of strong financial performance’ and announced a new $3.5 billion share buyback programme, unchanged from the prior quarter, and in line with forecasts. The buyback is set for completion before its first-quarter results.
Shares in Shell were trading 0.3% higher at 2,602.50 pence each in London on Thursday morning, essentially in line with the wider FTSE 100 index, which was up 0.1%.
Shell said the fourth-quarter outturn reflects ‘lower prices and margins, higher exploration write-offs’ and the non-cash hit from expiring hedging contracts.
Chief Executive Officer Wael Sawan said: ‘2024 was another year of strong financial performance across Shell. Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of $40 billion across the year, higher than 2023, in a lower price environment.
‘Our continued focus on simplification helped to deliver over $3 billion in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets.’
Cash flow from operating activities totalled $13.16 billion in the quarter compared to $12.58 billion a year prior. Cash flow from investing activities was an outflow of $4.43 billion, including capital expenditures of $6.9 billion, compared to $5.66 billion a year ago.
Net debt rose to $38.81 billion at the end December from $35.24 billion in the prior quarter, but was lower than $43.54 at the end of 2023.
Shell upped its fourth-quarter dividend by 4.1% to $0.3580 per share from $0.3440. For the whole year, its dividend amounted to $1.3900, an increase of 7.5% from $1.2935.
Shell added: ‘Total shareholder distributions in the quarter amounted to $5.7 billion comprising repurchases of shares of $3.6 billion and cash dividends paid to Shell PLC shareholders of $2.1 billion.’
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