Shell posts $21bn loss as coronavirus sends oil industry plunging into the red
Shell this morning posted a $21.6bn (£15.9bn) full year loss as the full costs of the coronavirus were laid bare.
The loss marked a massive swing to the red for the oil giant, which made a $15bn profit in 2019.
However, speaking to reporters this morning chief executive Ben van Beurden promised a “much more fulsome recovery” in 2021.
And the firm said it planned to bump up its dividend in the first quarter of the new year, the second increase since cutting it last spring.
Shares in Shell slipped 1.0 per cent this morning.
The massive loss – one of the biggest ever reported on the FTSE 100 – is even larger than the $18bn hit reported by rival BP earlier this week.
After an improvement in the third quarter, Shell swung back into the red in the last period, posting a £4bn loss for the quarter.
Most of the damage, however, was done back in the spring, amid a historic plunge in oil prices.
That prompted Shell to write off some £22bn and cut 9,000 jobs, as well as slashing its dividend for the first time since the Second World War.
The reorganisation is forecast to save the firm $2bn to $2.5bn by 2022, above and beyond cuts of $3 to $4bn announced last year.
‘Extraordinary year’ sets stage for Shell’s transition
Van Beurden said that 2020 had been an “extraordinary year” for the company.
The firm’s adjusted earnings for the year were $4.8bn, a decrease of 71 per cent from $16.5bn in 2019.
Shell added that it had reduced its net debt from $79bn to $75bn over the year.
The figures come a week before the Anglo-Dutch firm sets out its new strategy for hitting its target of being a net zero emissions company by 2050.
Unlike peers such as BP, Shell is looking to throw resources into hydrogen and biofuels solutions instead of more developed renewables such as wind power.
Stuart Lamont, investment manager at Brewin Dolphin, said: “Shell’s results follow a similar pattern to BP’s earlier in the week, demonstrating the highly challenging environment for oil and gas companies over the past year.
“Adjusted earnings – the company’s preferred profit measure – have dropped sharply and the outlook for 2021 remains uncertain, with Shell suggesting it may need to curb production.
“Although there is some progress with its divestment programme and the dividend remains in place, of greater concern at a time when the company needs to invest is that gearing has increased.
“Much like BP, if Shell is to transition towards a net-zero business by its chosen date – or even sooner – it will need to find the flexibility and agility to invest in new energy propositions, while remaining an attractive prospect for shareholders.”