Profit Plunge Fails to Rain on Shell's Share Buyback Parade

2023 pretax profits fell nearly 50% to $32.63 billion from $64.82 billion in 2022, while total revenue dropped 16% to $323.18 billion from $386.20 billion

Alliance News 1 February, 2024 | 11:10AM
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Shell PLC

Shell (SHEL) posted a sharp decline in profit and revenue in both the fourth quarter and 2023 as a whole this morning, citing lower oil and gas prices, but the company announced a new share buyback programme and a higher dividend, which led shares in the firm higher.

The London-based oil major said pre-tax profit plunged to $1.64 billion (£1.3 billion) in the fourth quarter of 2023 from $16.44 billion a year prior. Total revenue declined 21% to $80.13 billion from $101.20 billion.

For the 2023 financial year, pretax profit fell nearly 50% to $32.63 billion from $64.82 billion in 2022, while total revenue dropped 16% to $323.18 billion from $386.20 billion.

Shell said the worsened results in 2023 "reflected lower realised oil and gas prices, lower volumes, and lower refining margins, partly offset by higher liquefied natural gas trading and optimisation margins, and higher Marketing margins."

Investor Confidence in Shell

Morningstar analyst Allen Good said the results, despite being lower year on year, were positive overall: "The better-than-expected quarter, progress on cost and capital reductions, and continued shareholder returns should engender confidence in Shell’s refreshed, returns-focused strategy under new CEO Wael Sawan.

"Investors have already begun to buy in, leading to relative outperformance and sending shares higher. Although we now see shares as fully valued, we think Shell remains on the right track strategically, keeping it as one of the better options among European integrated oils."

Morningstar's fair value estimate was left unchanged at £26 per share, while on Thursday shares rose more than 2% to £25.09.

Dividend Increased

Despite its reduced profit, Shell increased its quarterly dividend per share to 34.40 cents from 28.75 cents a year before, bringing the total dividend for 2023 to $1.29, up 25% from $1.04 in 2022.

Shell also announced it has completed its $3.5 billion share buyback and will now launch a fresh $3.5 billion programme.

"Shell delivered another quarter of strong performance, concluding a year in which we made good progress across the targets outlined at our Capital Markets Day," chief executive Wael Sawan said.

"As we enter 2024 we are continuing to simplify our organisation with a focus on delivering more value with less emissions."

For 2024, Shell expects a cash capital expenditure of $22 billion to $25 billion, compared to $24.39 billion in 2023 and $24.83 billion in 2022.

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Shell PLC2,794.50 GBX0.63Rating

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