Shell boosts dividend after $37 billion profit for 2023

LONDON – Shell reported a US$28 billion (S$37 billion) profit for 2023 on Feb 1 after beating fourth-quarter earnings forecasts on strong liquefied natural gas (LNG) trading, allowing the oil giant to increase its dividend and extend share repurchases.

Annual profit was down 30 per cent from the previous year’s record, marked by lower chemicals and refining profit margins and slower fuel sales amid sluggish global economic activity following a blockbuster 2022 fuelled by a surge in energy prices after Russia’s invasion of Ukraine.

The British company increased its fourth-quarter dividend by 4 per cent and said it would repurchase a further US$3.5 billion of its shares over the next three months, a similar rate to the previous three months.

Shell’s payouts to shareholders reached around US$23 billion (S$31 billion) in 2023, over 10 per cent of the company’s market value, highlighting investors’ focus on returns as the sector grapples with an uncertain outlook for fossil fuels.

Shell is the first major global energy company to report 2023 full year results.

Its shares closed 2.4 per cent higher. They have outperformed rivals over the past year, rising by over 8 per cent.

Chief executive Wael Sawan took over in January 2023 with a vow to revamp Shell’s strategy to focus on higher-margin projects, steady oil output and increase natural gas production.

In recent months Shell has begun company-wide staff reductions, including in its low-carbon solutions division.

In a possible sign of the changing priorities, the group’s spending on its renewables and energy solutions division dropped in 2023 by 23 per cent from the previous year to US$2.7 billion, according to a Reuters analysis. That represents 11 per cent of Shell’s total capital spending in 2023, compared with 14 per cent in 2022.

Total group capital expenditure reached US$24.4 billion in 2023 and is expected to range from US$22 billion to US$25 billion this year.

“As we enter 2024 we are continuing to simplify our organisation with a focus on delivering more value with less emissions,” CEO Sawan said.

LNG trading

Shell ended the year on a strong note, posting fourth-quarter adjusted earnings, its definition of net profit, of US$7.3 billion, exceeding analysts’ expectations of US$6 billion profit but down from a record US$9.8 billion a year earlier.

Strong LNG trading results in the quarter helped offset weaker refining and oil trading results, while chemicals posted a loss of US$500 million.

“Shell’s LNG division continues to help support cash generation and the company also appears to have operational momentum,” RBC Capital Markets analyst Biraj Borkhataria said in a note.

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