21st Mar 2018 08:30
LONDON (Alliance News) - Royal Dutch Shell PLC on Wednesday reiterated its guidance for its Downstream business, expecting significant growth in earnings across the board.
Shell, London's largest listed company by market capitalisation, is guiding for USD6.0 billion to USD7.0 billion of annual organic free cash flow from Downstream by 2020, and USD9.0 billion to USD12.0 billion by 2025, based on a USD60.00 per barrel oil price and mid-cycle conditions.
It is to invest between USD7.0 billion and USD9.0 billion across the Downstream business each year, and hopes to deliver a return on average capital employed of above 15%.
Within Downstream, Shell said its Marketing business is the "most profitable marketing business among international oil companies". It is guiding for Retail annual earnings to grow by more than USD1.5 billion by 2025, reaching close to USD4.0 billion that year, having posted USD2.2 billion in 2017.
The other half of Marketing, Global Commercial, is expected to reach annual earnings of USD2.5 billion by 2025, compared to USD1.4 billion in 2017.
In Refining & Trading, Shell has reduced its indicative integrated break-even margin by more than USD1.50 a barrel since 2014 compared to 2011 to 2013, and expects to reduce this by a further USD0.50 to USD0.90 a barrel by 2020. It has planned a USD2.0 billion to USD3.0 billion annual capital investment programme, strengthening its Refining portfolio.
Shell expects Chemicals earnings to reach between USD3.5 and USD4.0 billion by 2025, having had a record year in 2017 with USD2.62 billion of earnings. The company is to invest USD3.0 to USD4.0 billion in the business annually, and expects global demand for petrochemicals to increase at least 3% a year.
Downstream Director John Abbott said: "This business will continue to create value for shareholders and customers.
"We believe our Marketing business is the most profitable in the industry, and Chemicals had a record year in 2017. Meanwhile, our refining and trading teams make the most of our scale, global presence and customer reach."
Shell 'B' shares were up 0.3% at 2,235.50 pence each on Wednesday morning, and Shell 'A' shares were up 0.2% at 2,203.50p.
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