While 2020 was all about survival and saw a swingeing cut to Royal Dutch Shell’s (RDSB) long-prized dividend for the first time since the Second World War - a recovery in the oil price means 2021 is looking more positive. First quarter results are robust and include an increase in the payout, helping the shares rise 1.8% to £13.41.
Shell, which had trailed its quarterly performance earlier in April when it booked a $200 million hit from the Texan snow storms at the start of the year, confirmed a 4% increase on its dividend per share payment to 17.35 cents for the first quarter of 2021.
The oil giant said earnings rose to $3.2 billion, up from $393 million in the final quarter of 2020. It has also generated more than $8 billion of cash in the first three months of the year, while reducing net debt by more than $4billion to $71.3 billion during the same time period.
TARGETING DEBT REDUCTION
Like its rivals Shell faces the challenge of investing in a transition away from fossil fuels while simultaneously maintaining its, albeit diminished, income credentials.
It is targeting a net debt figure of $65 billion and said that once this milestone is achieved, it will aim to increase shareholder distributions to 20-30% of cash flow from operations.
Chief executive officer Ben van Beurden said: ‘Our integrated business model is ideally positioned to benefit from recovering demand. Our competitive and robust financial performance provides the platform to achieve the goals of our Powering Progress strategy.’
Shell's first quarter performance was a vast improvement on a tough 2020, which saw oil prices plummet to historic lows. Currently the oil price stands at around $67 - back near levels seen before the pandemic hit.
