4th May 2023 18:34
(Alliance News) - Shell PLC on Thursday said its profit and revenue in the first quarter of 2023 rose on an annual basis, as it announced another USD4 billion in share buybacks.
Russ Mould, investment director at AJ Bell, said the record first quarter profit from Shell was "some feat" as the energy price environment has not been "supportive".
"Today's numbers make their own argument for Shell's integrated structure, with its energy trading arm helping to make up for lower oil and gas prices," Mould said, adding that the figures also constituted a "solid start" for new chief executive, Wael Sawan.
The London-based oil major saw pretax profit rise 33% to USD14.35 billion in the first quarter of 2023 from USD10.78 billion a year earlier, though down 13% from USD16.44 billion in the fourth quarter of 2022.
Total revenue and other income was up 7.0% to USD89.02 billion from USD83.16 billion a year earlier, though down 12% from USD101.20 billion in the fourth quarter.
Shell said it delivered strong results and robust operational performance against a backdrop of ongoing volatility.
Derren Nathan, head of equity research at Hargreaves Lansdown, argued that Shell's position as an end-to-end energy supplier has "so far" enabled it to "prosper" even as the industry faces some "severe" challenges. However, with the oil price facing sustained pressure, Nathan thinks things could get "tough" for Shell as the year progresses.
Walid Koudmani, chief market analyst at online investment platform XTB.com, agreed: "Prospects of a widespread recession and demand concerns have led to a noticeable pullback in oil prices while natural gas struggles to recover from the downward trend.
"Despite excellent results for the first 3 months of the year, things could prove to be quite different in the coming months unless we see a significant shift in expectations and actual consumption of energy products.
As a result, the situation for companies heavily involved in the energy market could prove to be quite volatile with a potential for high share price fluctuations."
AJ Bell's Mould was more optimistic, meanwhile: "Gas could have an important role to play in the energy transition as the world waits for the advancements in battery and renewables technology which could enable green sources of energy to provide consistent baseload power. If that proves the case then Shell's big push in this area over the last decade will look prescient."
On Thursday, Shell said it strengthened its portfolio with the completed acquisition of Danish renewable natural gas producer Nature Energy Biogas AS for nearly USD2 billion in February.
Shell finished 1.1% higher at 2,350.50 pence on Thursday in London. Over the past 12-months, the stock is up 2.5%.
By Heather Rydings, Alliance News senior economics reporter
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