Royal Dutch Shell reported first-quarter earnings that came in marginally-better-than expected, amid growing fuel demand recovery expectations and stronger commodity prices.
Royal Dutch Shell Reports Better-Than-Expected Q1 Earnings
The Anglo-Dutch, oil major also increased its dividend by around 4%, for the second time in six months, as the company sought to reassure investors of having gained a more stable footing. The development comes after Shell, last year, cut its payout in April. It was the first instance of the company resorting to the measure since World War II in April.
The company posted adjusted Q1 earnings at $3.2 billion as against $2.9 billion over the corresponding period of the earlier year, and $393 million for Q4 2020.
According to Refinitiv, analysts had expected the first-quarter adjusted earnings at $3.1 billion.
According to Ben van Beurden, CEO of Royal Dutch Shell, the company had started the year strong and was well positioned to leverage the recovering demand.
Shell confirmed that February’s massive winter storm that hit Texas had a $200 million impact on first-quarter adjusted earnings of which it had warned in an update published April 7.
The company’s shares gained 1.3% in London morning deals. The firm’s stock price had risen over 9% year-to-date, after falling nearly 40% in 2020.
Net debt was down by $4 billion through the first three months of the year, at $71.3 billion. The company had set a target of reducing its whopping $65 billion debt pile as part of its sustainable future plans.
Shell had called on investors to participate in an advisory vote on its climate plans at the annual shareholder meeting on May 13.
Van Beurden had earlier said under its energy transition strategy, the firm had drawn up plans for becoming a carbon neutral company by 2050. The strategy was designed for aligning its energy products, its services, and its investments with the Paris Agreement’s temperature goal and the global drive to counter climate change.
According to activist shareholder group Follow This which had slammed the energy strategy of the firm, it was not consistent with the Paris Agreement, a landmark accord aimed at cutting climate catastrophe risk.
The Paris climate accord had been ratified by around 200 countries in 2015. The countries had agreed to directing efforts for limiting the planet’s temperature rise to substantially under 2 degrees Celsius above pre-industrial levels and to focus efforts to cap the temperature rise at 1.5 degrees Celsius.
According to commentators, business leaders and policymakers were under increased pressure for delivering on the promises made as part of the Paris Agreement. This year’s COP26, was set to be held early November in Glasgow, Scotland.
Meanwhile, Shell warned of persistent significant uncertainty in its economic conditions in the second quarter outlook, with the industry anticipating a negative impact. According to the energy giant, there may be adverse impacts to sales volumes necessitating measures on its part to curtail gas and/or oil production.
According to Shell, measures of the kind would likely impact its financial and operational metrics in a variety of ways.
The oil and gas industry, last year, had taken a massive economic hit from the coronavirus pandemic coupled with a historic fuel demand shock, tens of thousands of job cuts and write-downs and plunging commodity prices.
Earlier in the week, BP reported that net profit for Q12021 had more than tripled, driven mostly by exceptional performance of trading and gas marketing as also stronger commodity prices. Consequently, the stage had been set for energy company to announce plans for starting shares buyback.
Meanwhile, oil prices had risen over 30% since the start of the year with demand recovery expectations appearing to have offset concerns over increasing Covid-19 infections.