Shell reports sharp fall in annual profit, increases dividend

LONDON – Oil giant Royal Dutch Shell reported a sharp drop in full-year earnings on Thursday as the coronavirus pandemic took a heavy toll on the global oil and gas industry.

Shell reported an adjusted profit of $ 4.85 billion for the full year 2020, compared to a profit of $ 16.5 billion for the full year 2019, which is a 71% decline. Analysts polled by Refinitiv expected full-year 2020 net profit to be $ 5.15 billion.

For the last quarter of 2020, Shell reported an adjusted profit of $ 393 million, while analysts lacked expectations of $ 470.5 million.

The company said it would increase its first-quarter dividend to $ 0.1735 a share, up 4% from the previous quarter.

Shell CEO Ben van Beurden described 2020 as an “extraordinary” year.

“We have taken tough but decisive action and demonstrated very resilient operational delivery while caring for our people, customers and communities. We come out of 2020 with a stronger balance, ready to accelerate our strategy and make the future of energy,” van Beurden said in a statement.

Income attributable to Shell shareholders plunged 237% to a loss of $ 21.7 billion in full year 2020, down from a profit of $ 15.8 billion in all of 2019.

Shell said this was the first full year loss since the unification of the Koninklijke Nederlandse Petroleum Maatschappij and Shell Transport & Trading Company into a single parent company in 2005.

Energy super-majors have endured a terrible 12 months on virtually every measure in 2020, and the industry faces significant challenges and uncertainties in its recovery.

Last year, the Covid pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented depreciation and tens of thousands of job losses.

Shell said it reduced its net debt by $ 4 billion to $ 75 billion over the course of 2020.

The company’s stock is up more than 3% year-to-date, after falling more than 44% last year.

Shell’s results come as oil and gas giants try to reassure investors about their future profitability, indicating an expected increase in fuel demand in the second half of the year and a massive roll-out of Covid vaccines.

However, renewed lockdown measures and limited mobility worldwide amid the ongoing Covid-19 crisis have prompted some Shell colleagues to warn of a difficult start to 2021.

US major Exxon Mobil reported on Tuesday that it lost $ 20.1 billion during the most recent quarter, while UK-based oil and gas company BP posted its first full year net loss in ten years.

International benchmark Brent crude oil futures traded at $ 58.81 a barrel Thursday morning, up about 0.6%, while US West Texas Intermediate futures were at $ 56.08, up more than 0.7%.

Oil prices have steadily improved since the beginning of the year, with the WTI rising to its highest level in more than a year during the previous session. Crude futures were bolstered by ongoing production cuts and the massive rollout of Covid vaccines.

OPEC and non-OPEC partners, an oil producer group also referred to as OPEC +, maintained their production policies on Wednesday, buoyed by rising oil prices.

The energy alliance said it was “optimistic” for a year of recovery in 2021.