Shell Q1 profit drops 28%, but beats expectations
Shell reported Friday a 28% decline in its first-quarter profit, to $5.58billion, exceeding analyst expectations. It also kept pace with its share buyback program despite falling oil prices and lower refinery margins than the previous year.
It announced that it would purchase $3.5 billion in shares over the next three-month period, marking the 14th consecutive quarter with a minimum $3 billion buyback program.
This is in contrast to rival BP which, this year, has drastically reduced its buybacks to strengthen its balance sheet. Shell's gearing (debt-to-equity) ratio of 18.7% is lower than BP's 25,7%.
Shell's adjusted net income, which is its definition, was $5.58 billion for the first quarter. This is above the average analyst poll forecast of $4.96, but lower than $7.73 billion from a year earlier.
Shell announced a strategy update for March in which it pledged to return cash to its shareholders, primarily via buybacks. It also trimmed investments until 2028, and hinted at the possibility of selling some chemicals assets.
The company reiterated on Friday its reduced annual budget of 20-$22 billion dollars for this year.
Its refining margin was $6.2 per barrel, up from $5.5 at the end last year.
Brent crude oil prices, the global benchmark, averaged $75 per barrel in the quarter between January and March. This compares to $87 a baril a year ago.
Shell's gas trading business performed in line with its previous quarter, despite expiring hedge contracts. BP on the other hand, said a poor result in its trading business weighed down its first-quarter earnings.
(source: Reuters)
