2nd May 2024 11:22
(Alliance News) - Shell PLC impressed analysts as first quarter results beat forecasts with the muted share price reaction more a reflection of lower oil prices than performance.
Shares in Shell rose 1.0% to 2,847.50 pence each in London on Thursday.
In the first quarter, Shell said total revenue, which includes its share of joint ventures and associates, fell 16% to USD74.70 billion from USD89.02 billion a year prior.
Shell's pretax profit slipped 23% to USD11.04 billion from USD14.35 billion a year prior.
Adjusted earnings fell 20% to USD7.73 billion from USD9.65 billion a year prior, ahead of the USD6.25 billion Bloomberg-cited consensus.
Basic earnings per share fell 9.5% to USD1.14 from USD1.26.
The dividend was increased 20% to USD0.344 from USD0.2875.
The USD3.5 billion buyback, pitched at the same level as the past two quarters, is expected to be completed by the second quarter 2024 results announcement.
UBS said adjusted earnings was 20% above consensus, and 10% ahead of its own forecast.
The broker said this was led by better-than-expected contributions from the Integrated Gas and downstream divisions.
US highlighted beats across all the key segments led by a strong performance in Integrated Gas, 16% above consensus, driven by higher production at 992,000 barrels of oil equivalent per day (consensus 976 kboe/d).
Upstream earnings interest, tax, depreciation and amortisation of USD7.89 billion was 5% higher than consensus, while Marketing Ebitda of USD1.69 billion was 19% ahead.
Chemical & Products Ebitda of USD2.87 billion was 27% above consensus benefitting from higher margins, offsetting lower crude processed and chemicals sales volumes.
The only earnings miss came from Renewables and Energy Solutions where earnings before interest and tax of USD267 million was 35% lower than consensus, UBS said.
Derren Nathan, head of equity research, Hargreaves Lansdown focused on "yet another quarter of staggering cash flows."
"Higher margins and up time at its refineries more than offset lower earnings in the upstream and integrated gas divisions," he noted.
"The strong cash generation is enabling Shell to reduce debt, reward shareholders and continue investing into the business as it targets total expenditure of USD22 to USD25 billion in both 2024 and 2025," he added.
AJ Bell's investment director Russ Mould said the relatively "muted" market reaction may fuel the argument it would be better served by listing in the US.
"However, this would be something of a red herring with enthusiasm for Shell likely tempered thanks to pressure on oil prices from strong US inventories," he noted.
The price of Brent crude has fallen by around 4.2% in the past week. On Thursday a barrel of Brent crude fetched USD84.19.
He thought it was "notable" the company, a leader in the natural gas market, achieved its stronger-than-anticipated quarterly showing despite facing an obvious impact from lower gas prices.
By Jeremy Cutler, Alliance News reporter
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