Shell 1Q earnings decrease to USD 4.5 billion

Royal Dutch Shell plc released its first quarter results and first quarter interim dividend announcement for 2014. The first quarter 2014 earnings, on a current cost of supplies (CCS) basis, were $4.5 billion compared with $8.0 billion for the first quarter 2013.

First quarter 2014 CCS earnings included an identified net charge of $2.9 billion after tax, mainly reflecting impairments related to refineries in Asia and Europe.

First quarter 2014 CCS earnings excluding identified items were $7.3 billion compared with $7.5 billion for the first quarter 2013, a decrease of 3%.

Compared with the first quarter 2013, Upstream earnings excluding identified items were supported by stronger Integrated Gas results as well as higher gas realisations and gas trading results. This was offset by the impact of exploration well write-offs, and higher costs and depreciation. Downstream earnings excluding identified items were impacted by lower industry refining margins and trading results.

Basic CCS earnings per share excluding identified items for the first quarter 2014 decreased by 2% versus the same quarter a year ago.

Cash flow from operating activities for the first quarter 2014 was $14.0 billion. Excluding working capital movements, cash flow from operating activities for the first quarter 2014 was $13.1 billion.

Capital investment for the first quarter 2014 was $10.7 billion, including $2.0 billion related to the acquisition of Repsol’s LNG business. Net capital investment for the quarter was $10.1 billion.

Total dividends distributed in the quarter were some $2.8 billion, of which $1.3 billion were settled under the Scrip Dividend Programme. During the first quarter some 32.4 million shares were bought back for cancellation for a consideration of some $1.2 billion.

Gearing at the end of the first quarter 2014 was 15.6%.

A first quarter 2014 dividend has been announced of $0.47 per ordinary share and $0.94 per American Depositary Share (“ADS”), an increase of 4% compared with the first quarter 2013.

Shell CEO Ben van Beurden says: “Shell’s profits enable the company to pay competitive dividends to shareholders and to finance new investments in oil and gas. Our long-term strategy is sound.

“Our first quarter 2014 results reflect more robust levels of profitability. However, as we saw in 2013, we are in an industry where high volatility remains, both in the macro-environment and in our quarterly results.

“The priorities I set out at the start of 2014 have not changed.

“I am determined to improve our competitiveness, and to adapt the company to respond to changes in the industry landscape, particularly in Oil Products and North America resources plays.

“We are aiming to continue to balance growth and returns, by focusing sharply on our three key priorities – better financial performance, enhanced capital efficiency, including more selectivity on project choices and $15 billion of divestments in 2014-15, and continuing strong project delivery.

“Our investment strategy is delivering where it matters – at the bottom line. The first quarter of 2014 has seen new, profitable production from the deep-water Gulf of Mexico and Iraq, together with new LNG from our acquisition of Repsol’s portfolio.

“We are making hard choices on Shell’s assets and options, to improve capital efficiency, in both Upstream and Downstream. The divestments underway in Downstream in four countries are part of Shell’s drive to improve our competitive position. Downstream has the potential to average 10-12% ROACE, more than double current levels, and to deliver around $10 billion of annual cash flow. I am determined to improve our performance in this business.

“The impairments we have announced today in Downstream reflect Shell’s updated views on the outlook for refining margins. There are substantial pressures on the industry from excess capacity, changing product demand, and new oil supplies from liquids-rich shales.

“The 4% dividend increase we have confirmed today for the first quarter 2014 underscores our delivery in recent years, and our confidence in the future potential.”

[mappress]

April 30, 2014; Image: