Shell's profits beat expectations by $6.9 billion and raise dividends by 5%
Shell's first-quarter profit surpassed estimates on Thursday and reached its highest level in two years, at $6.9billion, thanks to gains related to the Middle East War. This led the company to increase the dividend by 5%.
It also slowed down its quarterly share-buyback programme from $3.5 billion, to $3 billion. This was to divert more cash to the balance sheet due to a short-term squeeze of liquidity after war-related disruptions in energy supply increased its debt.
Sinead?Officer Gorman, Shell's Chief Financial Officer, said that the dividend increase "really reflects the confidence we have in long-term cash flows." She said she still believed Shell shares were valued too low.
She said that she has reduced the amount of buybacks to add cash to the balance.
OIL TRADE BONANZA: ECHOING OTHER EUROPEAN POWERS
Shell shares fell 2.2% at the opening of trading. This was in line with that of other oil majors, as global benchmark?oil price levels have fallen from their peaks above $100 per barrel. .
Shell's first-quarter adjusted earnings (its definition of net profits) rose from $5.58 to $6.92 Billion, beating the analyst consensus of $6.36 Billion in a poll conducted by the company.
The profits at its Chemicals and Products unit, which includes its oil trading desk and refining, were $1.93billion, exceeding expectations of $1.24billion and increasing from $0.45billion last year. The big profits in oil trading are similar to those of its European 'peers' BP and TotalEnergies, who also make speculative wagers on price movements as opposed to their more conservative U.S. competitors. Shell's oil-and-gas output dropped 4% from the previous quarter. This was mainly due to the outages in Qatar, where a part of the Pearl gas-to liquids plant had been damaged by the Middle Eastern conflict that began end-February. Shell said that full repairs could take up to a year.
CFO SAYS she is happy with the balance sheet despite debt Shell's gearing (or debt to equity ratio, including leases) rose to 23,2% from 20,7% at the end of 2025. Shell flagged higher debt because of managing war-related supply disruptions, price volatility and management.
Gorman said that she was "very happy" with Shell's financial statements.
The cash flow from operating activities, which was $6.1 billion, was affected by large swings in the inventory value. This pushed working capital (a measure of liquidity based on current assets less liabilities) to negative $11.2 billion.
Shell expects the working capital movement to reverse in time as oil and gas prices fall.
(source: Reuters)
