Shell Reports Lower Net Profit but Exceeds Expectations

Shell announced a net profit of $5.58 billion for the first quarter, a 28% decrease compared to the previous year. Despite the decline, this figure surpassed analysts’ forecasts. The company has decided to maintain its share buyback program at a steady pace, even with declining oil prices and reduced refining margins compared to the previous year.

Shell intends to repurchase $3.5 billion worth of shares over the coming three months. This marks the fourteenth consecutive quarter in which the buyback initiative has been at least $3 billion.

This approach differs from that of its competitor, BP, which has significantly decreased its buybacks this year to bolster its financial position. Shell’s gearing ratio, which measures debt relative to equity, stands at 18.7%, lower than BP’s 25.7%.

Shell’s adjusted earnings, which the company uses as its definition of net profit, reached $5.58 billion during the first quarter. This exceeds the average estimate of $4.96 billion from a poll of analysts but falls short of the $7.73 billion reported a year prior.

During a strategy update in March, Shell committed to returning more funds to shareholders, primarily through buybacks, fueled by increased liquefied natural gas sales. The company also plans to reduce investments through 2028 and has raised the possibility of divesting or closing certain chemical assets.

The company reaffirmed its reduced annual investment budget of $20-$22 billion for the current year.

Its indicative refining margin was $6.2 per barrel, a decrease from $12 per barrel the previous year but an increase from $5.5 per barrel at the close of the prior year.

Global benchmark Brent crude prices averaged approximately $75 a barrel during the period from January to March, versus roughly $87 a barrel in the corresponding period last year.

Shell indicated that its gas trading performance was consistent with the previous quarter, despite being affected by expiring hedging contracts.

Conversely, BP attributed its weaker first-quarter results, in part, to a poor performance in its gas trading division.