Shell raises dividend despite plunging profits
Shell has raised its dividend despite profits plunging by 80pc in the third quarter to $955m (£734m).
After slashing its payout for the first time since the Second World War in April, Europe's largest oil company increased its third quarter dividend to 16.65 US cents – still two-thirds lower than this time last year.
It blamed the fall in profits on lower oil prices and production margins compared to last year, but beat analysts' estimate of a $146m adjusted profit.
The hit was partly offset by lower operating expenses, well write-offs, depreciation and strong marketing margins, Shell said.
Chief executive Ben van Beurden said Shell's cash flow meant the company could expand while also raising shareholder payouts, making it a "compelling investment case".
"We must continue to strengthen the financial resilience of our portfolio as we make the transition to become a net-zero emissions energy business. Our decisive actions taken earlier in the year have solidified our operational and cash delivery," he said.
The Anglo-Dutch energy giant said that cash flow from operating activities hit $10.4bn, down 15pc on last year.
It comes after rival BP reported a surprise return to quarterly profitability on Tuesday following an uptick in fuel sales and oil prices.
BP is preparing to build wind turbines off the UK coast for the first time as the oil behemoth pushes ahead with a bid to slash its reliance on fossil fuels under new boss Bernard Looney.
Shell is also seeking to reshape its portfolio of assets and products to meet the cleaner energy needs of its customers in the coming decades, and plans to be a net-zero emissions energy business by 2050 or sooner.
Last month, it announced plans to axe 9,000 jobs, or 10pc of its workforce, as the industry seeks to cut costs amid sweeping changes.
Many of these cuts will come from Shell's upstream division, company sources told The Telegraph at the time, signalling a lasting move away from the business of drilling for oil.
Mr van Beurden said more detail on targets for growth in renewables would come in February.
He added: "But if you look at the hydrogen, bio, power businesses, that are all part of that marketing platform from which we want to then build these businesses, that part of our business will be attracting about 25pc of our capital.
"That is actually more than a doubling - in aggregate we tended to spend about 11pc on that part of the business in the last three years. How that is broken out - wait for February."
Asked about the depressed share price, Mr van Beurden said the oil and gas sector had been "in the dog house" due to capital indiscipline, as well as the risks of the shift to lower carbon energy.
However, he argued that Shell was now more disciplined in its spending and was "remarkably well-performing", adding: "We have to show that we have the promise of growth into the future, but also now."
Biraj Borkhataria, an analyst at RBC, said Shell has delivered a strong set of results that puts the company “back on the front foot” with investors.
Citi analysts said Shell had "delivered a good quarter and promises of an improved shareholder distribution plan."
Shares rose 1.3pc to 911p but were above £22 at the start of the year.
