30th Jan 2025 09:07
(Alliance News) - Shell PLC on Thursday maintained the pace of share buybacks despite weaker-than-expected fourth quarter earnings, which reflected write-offs in its oil exploration business and lower oil prices.
The London-based oil major said fourth-quarter revenue declined 17% to USD66.81 billion from USD80.13 billion a year prior. Pretax profit, however, shot up to USD4.21 billion from USD1.64 billion.
For the whole of 2024, revenue faded 11% to USD289.03 billion from USD323.18 billion, while pretax profit fell 8.3% to USD29.92 billion from USD32.63 billion.
In the final quarter, adjusted earnings were 39% lower at USD3.66 billion, shy of the Vara-cited consensus of USD4.10 billion. Annual adjusted earnings were down 16% at USD23.72 billion, also below the consensus of USD24.11 billion.
The fourth quarter included net impairment charges and reversals of USD2.2 billion, and net losses related to sale of assets, higher than USD1.3 billion in the third quarter.
"As expected, Shell reported 4Q results this morning which showed relatively soft earnings but continued strong cash generation, with a small miss at net earnings, driven by the downstream segment, with a larger loss than expected in Chemicals, and weaker oil trading weighing on refining results," commented RBC Capital Markets analyst Biraj Borkhataria.
Despite the lower earnings, Shell said 2024 was "another year of strong financial performance" and announced a new USD3.5 billion share buyback programme, unchanged from the prior quarter, and in line with forecasts. The buyback is set for completion before its first-quarter results.
Shares in Shell were trading 0.3% higher at 2,602.50 pence each in London on Thursday morning, essentially in line with the wider FTSE 100 index, which was up 0.1%.
Shell said the fourth-quarter outturn reflects "lower prices and margins, higher exploration write-offs" and the non-cash hit from expiring hedging contracts.
Chief Executive Officer Wael Sawan said: "2024 was another year of strong financial performance across Shell. Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of USD40 billion across the year, higher than 2023, in a lower price environment.
"Our continued focus on simplification helped to deliver over USD3 billion in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets."
Cash flow from operating activities totalled USD13.16 billion in the quarter compared to USD12.58 billion a year prior. Cash flow from investing activities was an outflow of USD4.43 billion, including capital expenditures of USD6.9 billion, compared to USD5.66 billion a year ago.
Net debt rose to USD38.81 billion at the end December from USD35.24 billion in the prior quarter, but was lower than USD43.54 at the end of 2023.
Shell upped its fourth-quarter dividend by 4.1% to USD0.3580 per share from USD0.3440. For the whole year, its dividend amounted to USD1.3900, an increase of 7.5% from USD1.2935.
Shell added: "Total shareholder distributions in the quarter amounted to USD5.7 billion comprising repurchases of shares of USD3.6 billion and cash dividends paid to Shell PLC shareholders of USD2.1 billion."
By Jeremy Cutler, Alliance News reporter
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