Shell (SHEL.L) announced its annual profit of $28 billion, surpassing fourth-quarter earnings expectations thanks to robust liquefied natural gas (LNG) trading.
This achievement has allowed the energy giant to boost its dividend and extend share repurchases.
However, this annual profit represents a 30% decrease from the prior year, impacted by reduced profits in chemicals and refining, as well as slower fuel sales amidst a sluggish global economy following the energy price surge triggered by Russia’s invasion of Ukraine in 2022.
In a move reflecting investor interests in returns amid an uncertain future for fossil fuels, Shell increased its quarterly dividend by 4% and revealed plans to repurchase $3.5 billion worth of its shares over the next three months, mirroring the previous rate.
In 2023, the company paid out approximately $23 billion to shareholders, accounting for over 10% of its market value.
Shell is the first major global energy corporation to unveil its 2023 full-year results.
Consequently, its shares saw a 2.5% rise at 1240 GMT, outperforming industry rivals with an 8% increase over the past year.
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In January 2023, CEO Wael Sawan initiated a strategy overhaul to prioritize higher-margin projects, stable oil output, and increased natural gas production.
Shell has also begun workforce reductions company-wide, including its low-carbon solutions division.
Demonstrating shifting priorities, the company’s spending on renewables and energy solutions dropped by 23% in 2023 to $2.7 billion, accounting for 11% of its total capital spending, compared to 14% in 2022.
In 2023, Shell’s total group capital expenditure reached $24.4 billion and is projected to range between $22 billion and $25 billion for the current year.
The company concluded the year on a strong note, reporting fourth-quarter adjusted earnings of $7.3 billion, exceeding analyst forecasts but lower than the previous year’s record $9.8 billion.
Strong LNG trading results compensated for weaker refining and oil trading, while chemicals recorded a $500 million loss.
As the company heads into 2024, CEO Sawan emphasizes simplifying the organization with a focus on delivering more value while reducing emissions.
Exxon Mobil and Chevron are set to report their 2023 results soon, followed by BP and TotalEnergies.
Shell increased its dividend by 4% from the previous quarter to $0.344 per share, marking a 20% annual increase.
This is the seventh dividend increase since the historic cut during the COVID-19 pandemic. Shareholder distributions in 2023 reached approximately $23 billion, constituting over 40% of its cash flow from operations.
However, Shell’s free cash flow dropped to $7 billion in the fourth quarter, the lowest in 2023, less than half of the previous year’s $15.5 billion.
Shell attributed pretax impairment charges of $5.5 billion to factors such as reducing the value of its chemicals business in Singapore, revisions of oil and gas operations in Nigeria, Britain, and North America, and LNG production estimate revisions in Australia.