It seems being an investor in Shell is like having a cash machine that never stops giving. Despite reporting weaker-than-expected profits of $23.7bn (ÂŁ19bn) for 2024, the oil giant has sweetened the pot for its shareholders with a 4% dividend increase and a $3.5bn share buyback for the final quarter of the year.
This is the 13th consecutive quarter in which Shell has handed out buybacks of more than $3bn, proving that even when profits dip, its investors stay well-fed.
A dip in profitsâbut plenty left to go around
Shellâs adjusted earnings of $23.7bn narrowly missed the $24bn analysts had predicted but still represent a sizable chunk of change. However, they pale in comparison to the companyâs 2023 profits of $28.25bn and its record-breaking $40bn bonanza in 2022, when global oil markets were thrown into chaos following Russiaâs invasion of Ukraine.
So, whatâs the story behind the profit slide? Falling oil and gas prices have taken the shine off earnings. The average price for oil last year was $80.20 a barrel, down from more than $100 in 2022. Meanwhile, US benchmark gas prices, known as Henry Hub, tumbled from an average of $6.50/MMBtu in 2022 to just $2.33/MMBtu.
Shell keeps its cash flowing
But itâs not all doom and gloom for the company. Shellâs chief executive Wael Sawan was quick to point out that cashflows remain strong despite the dip, helped by the company shaving $3bn off its costs.
Sawan knows how to keep shareholders happy, even when times get tough: keep the buybacks flowing and sprinkle in a dividend boost. For Shell investors, itâs business as usual.
Campaigners say itâs time to pay up
Not everyone is celebrating Shellâs financial success. Climate activists at Greenpeace are once again calling for the oil giant to use its multibillion-dollar profits to help fund climate crisis relief.
Elena Polisano, one of Greenpeaceâs lead campaigners, didnât mince her words:
âOil companies like Shell are causing the climate crisis, and they have the billions necessary to fund the clean-up of homes and communities â yet they donât pay a penny for the loss and damage they cause.â
Greenpeace is urging the UK government to make fossil fuel companiesânot taxpayersâcover the costs of climate disasters such as flooding. But whether Shell will ever divert its windfall profits into climate reparations remains to be seen.
For now, shareholders can sit back, relax, and count their cash.
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