Shell, reported a significant drop in adjusted earnings for the last quarter of 2024, with profits amounting to $3.7 billion. This represents a 39% decrease compared to the third quarter and is approximately 10% below what financial analysts had anticipated. The downturn was attributed to several factors including write-offs in Shell’s oil exploration segment, reduced margins, and a decline in oil prices.
Despite the underwhelming financial performance in the fourth quarter, Shell decided to increase its dividend by 4%, signaling a commitment to shareholder returns. The company also confirmed that it would continue its share buyback program at a rate of $3.5 billion per quarter. This strategy reflects a pledge by Shell’s CEO, Wael Sawan, to sustain shareholder returns even in a softening oil market, which increasingly pressures the sector.
Shell incurred $2.2 billion in impairment charges and losses from asset sales during the quarter. On the debt front, Shell’s net debt increased by $3.6 billion since the last quarter, reaching $38.8 billion, although this was still a reduction from the $43.5 billion recorded in the same period of the previous year. This rise in debt is partly due to the financial commitments for dividends and share repurchases. For the full year of 2024, Shell reported adjusted earnings of $23.7 billion, marking a 16% decrease from the $28.2 billion recorded in 2023.
In the stock market, Shell’s share price showed little movement in early trading on Thursday, which analysts attributed to lowered expectations after a preliminary trading statement earlier in the month. Biraj Borkhataria, an analyst at RBC Capital, commented that given the adjusted expectations, the results were “largely uneventful.”
CEO Wael Sawan addressed the earnings dip in a video update, acknowledging the “softness” in Q4 earnings but highlighting that Shell had exceeded its cost-cutting targets. The company managed to trim costs by $3.1 billion by the end of 2024, surpassing its goal of $2 billion to $3 billion in savings, which was initially set for 2025.
This scenario reflects Shell’s strategic navigation through a challenging economic landscape, focusing on shareholder value while managing operational and financial adjustments.
