British oil giant Shell exceeded expectations for full-year profit, revealing a 4% boost to its dividend and unveiling a $3.5 billion share buyback initiative on Thursday.
In 2023, Shell reported adjusted earnings of $28.25 billion, marking a 29% decline from the previous year’s record-high annual profit of $39.9 billion. Analysts had anticipated a net profit of $27.5 billion for 2023, as per an LSEG-compiled consensus.
For the final quarter of 2023, Shell posted stronger-than-expected adjusted earnings of $7.31 billion, attributing the positive results to robust liquefied natural gas trading and optimization margins, which offset weaker oil products trading.
Shell (Credits: CNBC)
As part of its financial announcements, Shell declared a 4% increase in dividend per share for the fourth quarter and revealed a $3.5 billion share buyback program to be executed over the next three months. The company noted the completion of a previously announced $3.5 billion share buyback from November of the previous year.
During morning trading, shares of the London-listed stock saw an approximately 2% increase.
CEO Wael Sawan expressed satisfaction with the progress made but acknowledged the need for further strides. Responding to concerns about the balance between capital expenditure and investments in renewable energy, Sawan outlined the company’s key focus areas.
“Through 2023, we continued to fortify the balance sheet, reducing it by over a billion dollars. Regarding shareholder distributions, we’ve distributed 42% of our overall cash flow from operations, amounting to $23 billion,” Sawan stated. He emphasized Shell’s commitment to achieving net-zero emissions by 2050 and highlighted a $5.6 billion investment in “low-carbon” projects in the previous year.
Sawan emphasized finding a balance that enables Shell to ensure current energy security while strategically investing in its competitive strength for the energy transition. The company’s net debt stood at $43.5 billion at the end of the year, compared to $40.5 billion at the end of the third quarter, with Shell citing impairment charges of $3.9 billion for the final three months of the year.
Energy analyst Jamie Maddock at Quilter Cheviot noted Shell’s resilience in the face of challenges, anticipating continued success in the current geopolitical and market conditions.
Looking ahead, U.S. oil giants Exxon Mobil and Chevron are set to report earnings on Friday, with European peers BP and TotalEnergies expected to follow suit next week.
Oil prices on Thursday morning were higher, with Brent crude futures trading up 0.6% at $81.07 per barrel and U.S. West Texas Intermediate futures up 0.7% at $76.35 per barrel. Both Brent and WTI contracts experienced a 10% decline in 2023 amid geopolitical tensions and demand uncertainties in a volatile trading year.
