Shell’s third-quarter earnings reached $6 billion, surpassing forecasts by 12%, primarily driven by strong liquefied natural gas (LNG) sales that compensated for a significant decline in oil refining and trading results. Here are the key details:
Profit Breakdown: Shell’s adjusted earnings, defined as net profit, were $6.03 billion, exceeding analysts’ expectations of $5.36 billion but down 3% compared to the previous year.
LNG Performance: The company’s LNG division, its largest business, saw a 13% increase in profits, with sales of 17 million metric tons, up from 16 million a year earlier.
Refining Challenges: Shell experienced a nearly 70% annual drop in profits from its refining and chemicals division due to weakened global refining margins, driven by lower economic activity and new refinery startups in Asia and Africa.
Investor Confidence: The results, coupled with a reduction in debt and robust cash flow, have bolstered investor confidence in CEO Wael Sawan’s strategy to enhance the company’s performance by focusing on profitable sectors like oil, gas, and biofuels.
Share Buyback and Dividends: Shell announced a $3.5 billion share buyback over the next three months, maintaining its dividend at 34 cents per share.
Debt Reduction: The company reported its net debt fell to $35 billion, the lowest since 2015, with a debt-to-market capitalization ratio decreasing to 15.7%.
Operational Cash Flow: Cash flow from operations increased to $14.7 billion, up from $13.5 billion in the previous quarter, attributed to a $2.7 billion capital build.
Cost-Cutting Measures: Shell aims to reduce costs by $2-3 billion by the end of 2025, having recently scaled back its renewables and hydrogen operations and cut its oil and gas exploration workforce by 20%.