Shell raises dividend despite profits falling last year
Shell has increased its dividend to shareholders despite profits falling last year, after the energy giant was hit by weaker oil prices and lower demand for the fossil fuel.
The London-listed company raised its dividend by 4 per cent while posting earnings of $23.7bn (£19.1bn) for the calendar year, down from $28.3bn (£22.8bn) in 2023.
Shell also said it had hit a cost-cutting target of $3bn (£2.4bn) after setting the goal in 2022.
The company, which has been reported to be considering moving its stock market listing to the US, said it is keeping its London listing “under review”.
However, chief financial officer Sinead Gorman said moving the listing is “not a live discussion for us” currently.
She added that Donald Trump’s pro-oil and gas agenda was a positive for the company as a major outside investor in the US, adding: “We welcome the president’s support for the industry that’s coming through very strongly.”
Chief executive Wael Sawan said that despite the lower earnings, Shell’s cash flow remained “solid” at $40bn (£32bn) across the year, while operating in “a lower price environment”.
“Our continued focus on simplification helped to deliver over $3bn in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets,” he said.
It comes after a year in which oil prices have steadied and demand has fallen, partly as a result of the growing popularity of electric vehicles.
The oil supermajors, including US giants ExxonMobil and Chevron, have suffered falling margins in their refining businesses this year as a result.
The fossil fuel companies had made record profits in previous years after oil prices spiked during the global energy crisis.
Shell wrote that the lower income reflected less money from its liquefied natural gas trading operation and lower oil refining margins, among other factors.
Maurizio Carulli, an energy analyst at Quilter Cheviot, said: "Shell's fourth quarter 2024 results presented a mixed picture. While earnings fell below expectations, the company's cash flow performance exceeded consensus estimates.
"Seasonal factors, alongside lower prices and margins, impacted earnings negatively. However, these concerns are mitigated by Shell's robust cash flow generation.
“The announcement of a 4 per cent dividend increase and an additional $3.5bn buyback for Q1 2025 are significant positives. We also like the very disciplined approach to capital expenditure.
“Overall, Shell continues to demonstrate strong cash flow generation and a strategic focus on shareholder returns, operational improvements, and targeted capital expenditure under the capable leadership of Wael Sawan."
Earlier this month, BP said in an update ahead of its full-year figures that upstream oil and gas production in the fourth quarter was lower than the previous three months, while it expects oil trading to be “weak”.
BP said that oil prices were sharply lower in the final three months of 2024, at 74.73 dollars a barrel on average, compared with 80.34 dollars a barrel in the third quarter.
The update was the latest sign of tougher trading across the sector at the end of last year.
In a statement issued earlier this month, BP also confirmed its annual results will go ahead on February 11 as planned.