Shell reports sharp drop in profit for the year, increases dividend

LONDON – Oil giant Royal Dutch Shell on Thursday reported a sharp drop in profit for the year as the coronavirus pandemic hit the global oil and gas industry heavily.

Shell reported adjusted earnings of $ 4.85 billion for the year 2020. This compares to a profit of $ 16.5 billion for the year 2019, reflecting a 71% drop. Analysts polled by Refinitiv had expected net income for the entire year 2020 at $ 5.15 billion.

For the last quarter of 2020, Shell reported adjusted earnings of $ 393 million, losing analysts’ expectations of $ 470.5 million.

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

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

“We take difficult but decisive actions and demonstrate highly resilient operational delivery in caring for our people, customers and communities. We are leaving 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy ”, van Beurden said in a statement.

The revenue attributable to Shell shareholders fell 237%, to a loss of $ 21.7 billion in the year 2020, compared to a profit of $ 15.8 billion in the year 2019.

Shell said this was the first loss in an entire year since the merger of Royal Dutch Petroleum Company and Shell Transport & Trading Company into a parent company in 2005.

Energy supermajors endured a terrible 12 months for virtually all measures in 2020 and the industry faces significant challenges and uncertainties as it seeks to recover.

Last year, the Covid pandemic coincided with a historic demand shock, falling commodity prices, lost profits, unprecedented write-offs and tens of thousands of job cuts.

Shell said it reduced its net debt from $ 4 billion to $ 75 billion over 2020.

The company’s shares rose more than 3% in the year, having fallen more than 44% last year.

Shell’s results come at a time when oil and gas giants seek to reassure investors about their future profitability, pointing to an expected increase in fuel demand in the second half of the year and a mass launch of Covid vaccines.

However, renewed blocking and limited mobility measures around the world amid the continuing Covid-19 crisis have prompted some of Shell’s peers to warn of a difficult start to 2021.

American major Exxon Mobil reported on Tuesday that it lost $ 20.1 billion during the most recent quarter, while British oil and gas company BP recorded its first year-wide net loss in a decade.

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

Oil prices have been steadily improving since the beginning of the year, with WTI rising to its highest level in more than a year in the previous session. Crude oil futures have been supported by continued production cuts and the mass launch of Covid vaccines.

OPEC and non-OPEC partners, an oil-producing group sometimes referred to as OPEC +, maintained their production policy on Wednesday, driven by rising oil prices.

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