Shell: FTSE 100 giant’s shares rise after unveiling buyback and profit hit
Shell recorded a sharp fall in first-quarter profits on Friday, after crude oil priced weakened amid geopolitical uncertainty.
The FTSE 100 oil giant recorded adjusted earnings of $5.58bn (£4.2bn) for the first three months of the year.
Whilst this surpassed analyst expectations of $4.96, it marked a stark fall from the $7.73bn reported for the same period last year.
Shares in the energy firm rose over two per cent during early trading on Friday.
Crude oil reached a quarterly high on January 15, ahead of President Donald Trump’s inauguration, at $82 per barrel.
But it declined in the months following and settled around $75 on March 31.
The reporting period narrowly missed Trump’s sweeping ‘Liberation Day’ levies on trading partners, which sent oil prices tumbling. A price of a barrel plummeted below $60 in the fallout of Trump’s erratic trade policy.
Shell’s cash flow from operations fell to $9.28bn in the first quarter, down from $13.6bn in the prior period.
Meanwhile, net debt climbed to $41.52bn, up from $38.81bn in the fourth quarter.
Mark Crouch, market analyst for eToro, said: “Despite sizable losses across the energy sector, Shell smashed analysts’ expectations by over $1bn in the first quarter as strict capital discipline, a hallmark of Shell, continues to drive strong shareholder returns and insulate the business from market shocks.
“Falling oil and gas prices, OPEC production increases, and tariff volatility have weighed heavily on producers. But for Shell, whose profits jumped to $5.6bn, strategic execution and a clear identity has delivered in droves.
Shell announces another buyback
Shell showed strong performance in integrated gas with takings of $2.4bn and upstream at $2.34bn.
The company recorded a loss of $42m on renewables and energy solutions.
The firm announced a $3.5bn share buyback program, which it said it intends to complete ver the next three months. This marks Shell’s 14th consecutive quarter of at least $3bn in buybacks.
It added that total shareholder distributions paid over the last four quarters were 45 per cent of cash flow from operations, in line with its 40-50 per cent policy.
Wael Sawan, Shell’s chief executive, said the earnings were “another solid set of results”.
He added: “Our strong performance and resilient balance sheet give us the confidence to commence another $3.5 billion of buybacks for the next three months, consistent with the strategic direction we set out at our Capital Markets Day in March.”