A logo at a Royal Dutch Shell Plc petrol station in Rotterdam, the Netherlands, on Tuesday April 27, 2021.
Peter Boer | Bloomberg | Getty Images
LONDON – Oil giant Royal Dutch Shell reported slightly better results than expected in the first quarter on Thursday as commodity prices were stronger and expectations of a recovery in fuel demand increased.
Shell also hiked its dividend around 4%, the second increase in six months as the oil major wants to reassure investors that it has a more stable base. It comes after Shell cut its payout for the first time since World War II last April.
The Anglo-Dutch company reported adjusted earnings of $ 3.2 billion for the three months ended March. Compared to $ 2.9 billion in the same period last year and $ 393 million in the fourth quarter of 2020.
According to Refinitiv, analysts had expected adjusted earnings of $ 3.1 billion for the first quarter.
Ben van Beurden, CEO of Royal Dutch Shell, said in a statement that the company had a “strong start” to the year and was “ideally positioned to benefit from the recovery in demand”.
Shell confirmed that the massive winter storm that struck Texas in February had a combined impact of around $ 200 million on adjusted earnings for the first quarter. It had warned that this would likely be the case in an update released April 7th.
Shell shares rose 1.3% during morning trading in London. The company’s share price is up more than 9% since the start of the year, after falling nearly 40% in 2020.
Net debt was reduced by $ 4 billion to $ 71.3 billion in the first three months of the year. The company has set itself the goal of reducing its mountain of debt to $ 65 billion as part of its plans for a sustainable future.
Shell has asked investors to take part in an advisory vote on their climate plans at the group’s annual general meeting on May 13th.
Shell’s Van Beurden previously said that the company’s energy transition strategy, which includes plans for a climate neutral company by 2050, “is designed to bring our energy products, services and investments in line with the temperature target of the Paris Agreement, and that global effort to combat climate change. “
Activist shareholder group Follow This has criticized the company’s energy strategy, saying it is inconsistent with the Paris Agreement – a landmark deal that is seen as critically important in reducing the risk of a climate catastrophe.
Almost 200 countries ratified the Paris Climate Agreement in 2015 and agreed to limit the temperature rise of the planet to “far below” 2 degrees Celsius above pre-industrial levels and to limit the temperature rise to 1.5 degrees Celsius.
Policymakers and business leaders are under increasing pressure to deliver on promises made under the Paris Agreement ahead of this year’s COP26, due to take place in Glasgow, Scotland, in early November.
“Significant Uncertainty” ahead
In its outlook for the second quarter, Shell warned of continuing “significant uncertainties” in economic conditions with expected negative effects on the oil and gas industry. The energy giant said sales volumes could be adversely affected and it may need to take action to curtail oil and / or gas production.
“Such actions are likely to have various effects on our operational and financial metrics,” said Shell.
The oil and gas industry was shaken last year when the coronavirus pandemic coincided with a historic shock in fuel demand that lowered commodity prices, unprecedented write-offs, and cut tens of thousands of jobs.
Earlier this week, British oil major BP reported that net profits more than tripled in the first quarter, largely due to “exceptional” gas marketing and trading performance and stronger commodity prices. This paved the way for the energy company to announce plans to buy back shares.
Oil prices have risen around 30% since the start of the year as expectations of a recovery in demand appear to have offset concerns about the impact of rising Covid-19 infections.
The international benchmark for Brent crude oil futures was trading at $ 67.66 open a barrel on Thursday morning around 0.6% for the session while US West Texas Intermediate Futures were at $ 64.24, more than 0.5% higher.
OPEC and non-OPEC allies, an influential producer group sometimes referred to as OPEC +, reiterated an improvement in market sentiment this week as they announced plans to continue easing supply restrictions over the coming months.