Shell misses expectations as earnings halve
Shell failed to deliver another bumper crop of profits in the last quarter, with the business falling short of market expectations.
The oil giant said on Thursday that it had seen its adjusted earnings more than halve in the three months to the end of June when compared with the same period a year ago.
A drop had been expected, but markets failed to forecast just how far earnings would fall.
Adjusted earnings reached just under 5.1 billion US dollars (£3.9 billion) during the quarter, down from 11.5 billion dollars (£8.9 billion) a year earlier.
Analysts had expected the figure to reach almost 5.6 billion dollars (£4.3 billion), according to a consensus compiled by the company.
The reduction came as the average price of each barrel of oil and gas that Shell sold dropped and the business reported lower profit margins in its refining business.
It also sold less liquid natural gas during the quarter, and its LNG trading business suffered somewhat too.
It is also a reduction from the oil major’s record first-quarter results, which saw it make 9.6 billion (7.6 billion) in adjusted earnings in just three months, well ahead of expectations at the time.
Since then Shell has courted controversy by saying it will no longer try to reduce its oil production by 1%-2% per year until the end of this decade.
The company said it has already achieved this target because it sold off some of its oil fields, allowing other companies to produce the oil instead.
It said it will continue to produce about as much oil as it does today until 2030.
The news comes as wildfires, which have been made much more common due to climate change, have been ravaging large swathes of land around the Mediterranean.
Greece, Algeria, Sicily and other places in the area have been hit by huge blazes which have displaced people and destroyed infrastructure.
Jonathan Noronha-Gant, from campaign group Global Witness, said millions of people are already suffering from climate change, and millions more will follow.
“While the planet burns, Shell is making billions in profits, paying out massive dividends to its shareholders, and ramping up its oil and gas investment,” he said.
“This is a company that acknowledges the urgency of the climate crisis. And yet it has U-turned on its climate commitments and doubled down on toxic fossil fuel energy.”
On Thursday, chief executive Wael Sawan said: “Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment.
“Today we are delivering on our … commitment of a 15% dividend increase.
“We are going further on our buyback guidance by commencing a 3 billion dollar (£2.3 billion) programme for the next three months and, subject to board approval, at least 2.5 billion (£1.9 billion) at the third-quarter 2023 results.
“As we deliver more value with less emissions, we will continue to prioritise share buybacks, given the value that our shares represent.”
Dr George Dibb, at think tank IPPR, said: “Incredibly, Shell is now paying more out to its shareholders in dividends and buybacks than it makes in profit, clearly prioritising these transfers over investing in a net zero future.”
