Photo: Source: Shell

In ‘strong start to 2021’ Shell almost doubles first-quarter earnings

Energy supermajor Shell has nearly doubled its earnings in the first quarter of 2020 due to higher realised oil prices and chemicals margins.

Shell said on Thursday in its financial report that its CCS earnings attributable to shareholders excluding identified items were $5.7 billion, which is a 197 per cent decrease when compared to the same period last year and profit of $2.9 billion.

This result reflects the fair value accounting of commodity derivatives, partly offset by redundancy and restructuring charges of $0.5 billion, mainly related to the restructuring plan named Reshape.

Shell posted revenues of $55.6 billion in the first quarter of 2021 compared to $60.03 billion in the same period last year.

Shell CEO Ben van Beurden stated: “Shell has made a strong start to 2021, generating over $8 billion of cash in the quarter. Our integrated business model is ideally positioned to benefit from recovering demand.

We have reduced net debt by more than $4 billion this quarter, progressing towards the $65 billion milestone to increase shareholder distributions. Our competitive and robust financial performance provides the platform to achieve the goals of our Powering Progress strategy”.

Unlike the first quarter of 2020 when the company decreased its dividend by 66 per cent, the first time for Shell to make such a decision in 80 years, the first quarter of this year saw a dividend increase by around 4 per cent when compared with the fourth quarter of 2020 – in line with the company’s progressive dividend policy.

Cash flow from operating activities for the first quarter of 2021 was $8.3 billion, which included negative working capital movements of $4.4 billion.

Cash flow from investing activities for the quarter was an outflow of $0.6 billion, driven mainly by capital expenditure and partly offset by proceeds from the sale of property, plant and equipment and businesses.

Compared with the first quarter of 2020, current-quarter adjusted earnings reflected higher realised oil prices and chemicals margins partly offset by lower realised refining and marketing margins.

Also worth noting, the company’s net debt at the end of the first quarter of 2021 was $71.3 billion, compared with $75.4 billion at the end of the fourth quarter of 2020. This was mainly driven by free cash flow generation in the quarter.