Shell is raising its dividend for the second time in six months after first-quarter earnings were better than expected
The Anglo-Dutch company reported adjusted earnings of $ 3.2 billion for the three months to the end of March. Analysts had expected $ 3.1 billion, according to Refinitiv.
Shell also increased its dividend by about 4%, the second increase in six months.
It’s because major energy companies want to assure investors that they have gained a more stable position in recent months.
LONDON – Oil giant Royal Dutch Shell reported slightly better than expected first quarter results on Thursday amid stronger commodity prices and growing expectations of a recovery in fuel demand.
Shell also increased its dividend by about 4%, the second increase in six months, as the oil company wants to reassure investors that it has secured a more stable position. It comes after Shell lowered its payout in April last year for the first time since World War II.
The Anglo-Dutch company reported adjusted earnings of $ 3.2 billion for the three months to the end of March. That compared to $ 2.9 billion for the same period a year earlier, and $ 393 million for the fourth quarter of 2020.
Analysts had expected first-quarter adjusted earnings to be $ 3.1 billion, Refinitiv said.
Ben van Beurden, CEO of Royal Dutch Shell, said in a statement that the company had made a “strong start” to the year and was “ideally positioned to capitalize on the pick-up in demand”.
Net debt was reduced by $ 4 billion to $ 71.3 billion in the first three months of the year.
Shell confirmed that the massive winter storm that engulfed Texas in February had a total impact of approximately $ 200 million on first-quarter adjusted earnings. It had warned that this would likely be the case in an update released April 7.
Shares of Shell are up more than 9% year-to-date, after falling nearly 40% in 2020.
In the outlook for the second quarter, Shell warned of continued “significant uncertainty” in economic conditions, with expected negative consequences for the oil and gas industry. The energy giant said sales volumes could be negatively impacted and it may need to take measures to limit oil and / or gas production.
“Such measures are likely to have different implications for our operational and financial measures,” said Shell.
The oil and gas industry entered a downward spiral last year when the coronavirus pandemic coincided with a historic shock in fuel demand, falling commodity prices, unprecedented depreciation and tens of thousands of job losses.
Earlier this week, British oil company BP reported that net profit in the first quarter had more than tripled, driven largely by “exceptional” gas marketing and trading performance and stronger commodity prices. It paved the way for the energy company to announce plans to buy back shares.
Oil prices are up about 30% since the beginning of the year as expectations of a recovery in demand appear to have allayed concerns about the impact of the rising Covid-19 infections.
International benchmark Brent crude oil futures traded at $ 67.66 a barrel Thursday morning, up about 0.6% for the session, while US West Texas Intermediate futures were $ 64.24, over 0.5% higher.
OPEC and non-OPEC allies, an influential producer group also referred to as OPEC +, reaffirmed improving market sentiment this week when it announced plans to maintain a phased easing of supply constraints in the coming months.