- Record first quarter with adjusted earnings beating forecasts
- New $4 billion buyback announced
- Shell expects to return $12 billion in buybacks and dividends in first half
Energy giant Shell (SHEL) provided more grist to the mill of campaigners for more aggressive windfall taxes by unveiling a record first quarter performance and accompanying $4 billion share buyback.
Investors reacted positively to the update, sending the shares 1.8% higher to £23.68. Shell reported pre-tax profit up 33% year-on-year to $14.35 billion and total revenue and other income up 7% to $89 billion. Adjusted earnings came in at $9.6 billion, significantly ahead of the forecast $8 billion.
According to the company this was the result of improved operational performance and a strong contribution from its trading division. This helped to make up for lower oil and gas prices.
The company’s integrated gas division, where it is a leader in LNG (liquefied natural gas), was also a strong driver behind the company’s profit, with higher LNG production from its Prelude facility in Australia.
BIG SHAREHOLDER RETURNS
Shell announced a further $4 billion buyback to be returned to shareholders before it announces its second quarter results in the summer. The dividend was also hiked 15% to $0.2875. In 2022 the company distributed $26 billion to shareholders in dividends and share buybacks and expects to return a further $12 billion in the first half of 2023.
Russ Mould, investment director at AJ Bell, commented: ‘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.
‘In a bid to close a yawning valuation gap to its US peers, Shell is busily buying back shares. This undermines any pleas of poverty amid a push for increased levies on its bumper profit.
‘A big driver of earnings and cash flow for Shell in recent times is its integrated gas business. Like Jupiter, Shell is a gas giant – with the £47 billion acquisition of BG back in 2016 helping to make it a leader in liquefied natural gas.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Tom Sieber) and the editor of the article (James Crux) own shares in AJ Bell.
LEARN MORE ABOUT SHELL
