Royal Dutch Shell PLC update
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Royal Dutch Shell plans to launch a $ 2 billion share buyback plan by the end of this year to raise dividends by almost 40% and allow energy majors to take advantage of stronger energy prices to return cash to investors.
The move, which took place when the group reported a surge in quarterly earnings after oil recovered above $ 70 a barrel in the second quarter, was more aggressive than analysts expected. The company said in April that dividends are likely to remain unchanged for the rest of 2021 after a slight increase in its previous earnings report.
Miraj Borkhataria of RBC Capital Markets said:
The company announced on Thursday that dividends will rise from 17.35 cents to 24 cents per share starting in the second quarter. Shell cut its dividend by two-thirds to 16 cents a year ago as the coronavirus pandemic drastically reduced demand and boosted energy prices. This is the first reduction since World War II. But this year oil and gas have recovered.
Investors wanted energy companies to return cash rather than increase investment, and share buybacks were more widely expected. However, many predicted that the buyback would be close to $ 1.5 billion. Shell said it will continue to keep its annual capital investment below $ 22 billion.
CEO Ben van Baden said the policy of increasing dividends by 4% each year “doesn’t change.”
Shell reported adjusted net income of $ 5.5 billion in the second quarter. This was slightly above analysts’ expectations of $ 5 billion, up from $ 3.2 billion in the first quarter.
Cash flow from operating activities, excluding working capital movements, reached $ 14.2 billion in the second quarter, exceeding analysts’ expectations of $ 12.1 billion.
Net liabilities fell from $ 71.3 billion in the previous quarter to $ 65.7 billion, significantly achieving our goal of reducing net liabilities to $ 65 billion before increasing shareholder distribution.
The company said it would “abolish” the $ 65 billion “milestone” and instead target the “whole cycle AA credit metric.”
Shell’s performance is underpinned by rising oil and gas prices, with international crude oil benchmark Brent trading near $ 75 a barrel this month, which was $ 45 a barrel at the beginning of the year, but gas prices are worldwide due to supply shortages. Has risen.
The recovery in energy prices is particularly pronounced compared to the second quarter of last year, when the pandemic blockade boosted demand and pushed oil prices to less than $ 20 a barrel.
Shell raises dividend and buybacks as oil prices soar Source link Shell raises dividend and buybacks as oil prices soar