The market was eagerly anticipating third quarter results from oil major Royal Dutch Shell (RDSB) thanks to the boost they should have received from higher year-on-year oil prices, particularly after BP (BP) beat expectations with its own numbers on 31 October. Unfortunately investors have been left disappointed for several reasons.
The shares have fallen 3% to £24.87 despite a 37% increase in Shell’s core profit measure to $5.6bn. This figure was below the $5.8bn forecast by analysts.
Interestingly every set of quarterly numbers so far for 2018 has seen BP do better than forecast and Shell do worse.
The company also has the misfortune of reporting the day after a big slide in the oil price, extending losses from the levels seen in early October when oil hit multi-year highs above $85 per barrel.
Shell’s results weren’t entirely bad. Cash flow from operations was nearly $15bn, the highest level since 2008 and earnings, while modestly short of forecasts, were still the highest quarterly total in four years.
The other key negative from the results was margin pressure in the company’s downstream (refining and marketing) businesses.
AJ Bell investment director Russ Mould says: ‘Markets are forward looking and Shell’s results were delivered against the backdrop of oil trading at multi-year highs. This may not be the case in the final part of the year.’
Despite the negative share price reaction, broker Cantor Fitzgerald is impressed with the figures.
It says: ‘Another barnstorming set of results from the supermajors (following BP earlier this week), with higher oil prices really lifting performance, coupled with a streamlined (well relatively so) business. Some might wish the dividend was increased, but we’ll see wh
