Shell Raises Dividend for Second Time in Six Months After First-Quarter Earnings Beat Forecasts

Peter Boer | Bloomberg | Getty Images
  • The Anglo-Dutch company reported adjusted earnings of $3.2 billion for the three months through to the end of March. Analysts had expected $3.1 billion, according to Refinitiv.
  • Shell also raised its dividend by around 4%, its second increase in six months.
  • It comes as energy majors seek to reassure investors that they have gained a more stable footing in recent months.

LONDON — Oil giant Royal Dutch Shell on Thursday reported slightly better-than-expected first-quarter earnings, amid stronger commodity prices and growing expectations of a fuel demand recovery.

Shell also raised its dividend by around 4%, its second increase in six months, as the oil major seeks to reassure investors it has gained a more stable footing. It comes after Shell slashed its payout for the first time since World War II in April last year.

The Anglo-Dutch company reported adjusted earnings of $3.2 billion for the three months through to the end of March. That compared with $2.9 billion over the same period a year earlier, and $393 million for the fourth quarter of 2020.

Analysts had expected first-quarter adjusted earnings to come in at $3.1 billion, according to Refinitiv.

Ben van Beurden, CEO of Royal Dutch Shell, said in a statement that the company had made a "strong start" to the year and was "ideally positioned to benefit from recovering demand."

Shell confirmed the massive winter storm that engulfed Texas in February had an aggregate impact of around $200 million on first-quarter adjusted earnings. It had warned this was likely to be the case in an update published April 7.

Shares of Shell rose around 1.3% during morning deals in London. The firm's stock price has climbed more than 9% year-to-date, having tumbled nearly 40% in 2020.

Net debt was reduced by $4 billion over the first three months of the year, falling to $71.3 billion. The company has targeted reducing its whopping debt pile to $65 billion as part of its plans for a sustainable future.

Climate plans

Shell has urged investors to take part in an advisory vote on its climate plans at the group's annual shareholder meeting in May.

Shell's van Beurden has previously said the firm's energy transition strategy, which sets out plans to become a carbon neutral company by 2050, is "designed to bring our energy products, our services, and our investments in line with the temperature goal of the Paris Agreement and the global drive to combat climate change."

Activist shareholder group Follow This has criticized the firm's energy strategy, saying it is not consistent with the Paris Agreement — a landmark accord considered critically important to reduce the risk of a climate catastrophe.

Almost 200 countries ratified the Paris climate accord in 2015, agreeing to pursue efforts to limit the planet's temperature increase to "well below" 2 degrees Celsius above pre-industrial levels and to pursue efforts to cap the temperature rise at 1.5 degrees Celsius.

Policymakers and business leaders are under intensifying pressure to deliver on promises made as part of the Paris Agreement ahead of this year's COP26, due to be held in Glasgow, Scotland in early November.

'Significant uncertainty' ahead

In its outlook for the second quarter, Shell warned of persistent "significant uncertainty" in economic conditions, with an anticipated negative impact on the oil and gas industry. The energy giant said sales volumes could be adversely impacted and it may need to take measures to curtail oil and/or gas production.

"Such measures will likely have a variety of impacts on our operational and financial metrics," Shell said.

The oil and gas industry was sent into a tailspin last year as the coronavirus pandemic coincided with a historic fuel demand shock, plunging commodity prices, unprecedented write-downs and tens of thousands of job cuts.

Earlier this week, British oil major BP reported that first-quarter net profit had more than tripled, largely driven by "exceptional" gas marketing and trading performance, and stronger commodity prices. It paved the way for the energy company to announce plans to start buying back shares.

Oil prices have climbed around 30% since the start of the year as expectations of a demand recovery appear to have offset concerns about the impact of rising Covid-19 infections.

International benchmark Brent crude futures traded at $67.66 a barrel on Thursday morning, up around 0.6% for the session, while U.S. West Texas Intermediate futures stood at $64.24, more than 0.5% higher.

OPEC and non-OPEC allies, an influential producer group sometimes referred to as OPEC+, reaffirmed improving market sentiment this week when it announced plans to stick to a phased easing of supply curbs in the coming months.

Copyright CNBC
Contact Us