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Sunday, October 2, 2022

Shell Reports Upswing in Full-year Profit, Raises Dividend and Buybacks

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Oil giant Shell on Thursday reported a sharp upswing in full-year profit, beating analyst expectations on rebounding commodity prices.

The British oil major posted adjusted earnings of $19.29 billion for the full-year 2021. That compared with a profit of $4.85 billion the previous year. Analysts polled by Refinitiv had expected full-year 2021 net profit to come in at $17.8 billion.

For the final quarter of 2021, Shell reported adjusted earnings of $6.4 billion.

Shell CEO Ben van Beurden described 2021 as a “momentous year” for the company and said progress made in the last 12 months would enable the firm “to be bolder and move faster.”

“We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company,” he added.

Shell also announced an $8.5 billion share buyback program in the first half of 2022 and said it expects to increase its dividend by 4% to $0.25 per share in the first quarter. Share buybacks totaled $3.5 billion in 2021.

Net debt was reduced to $52.6 billion by the end of 2021, a fall of $23 billion when compared to 2020.

Longer-term threats

Global oil demand roared back in 2021, with gasoline and diesel use surging as consumers resumed travel and business activity recovered amid the coronavirus pandemic. Indeed, the International Energy Agency has noted mobility indicators remain robust even as Covid-19 is once again causing record infections.

It marks a dramatic shift from 2020.

Shares of Shell rose 1.3% during mid-morning deals in London. The firm’s stock price is up over 20% year-to-date but remains below pre-pandemic levels.

Earlier this month, Shell said in a trading update that it would pursue its share buyback program “at pace” after selling its Permian shale business in the U.S. The decision was taken at the company’s first board meeting held in the U.K. at the end of last year.

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