Shell share price moves up at the open as it maintains dividend and keeps capex at previously forecast levels
Shell said today it will maintain its dividend and keep 2017 capex at previously forecast levels, after unveiling a massive jump in income.
The figures
Revenues for the full year fell to $233.6bn (£184.5bn) from $265bn, although it was up in the fourth quarter at $64.7bn, compared with $58.2bn in the final quarter of 2015.
However, profits jumped to $4.8bn, from $2.2bn for the year. Earnings per share rose to $0.58, from $0.31.
The company said it will pay a dividend of $0.47 per share for the fourth quarter.
Shares rose 1.6 per cent at the open.
Why it's interesting
With oil prices rising following Opec's decision to cap production, Shell maintained its forecast capital expenditure for 2017 at $25bn – Naeem Aslam at Think Markets said this "tells you that the sector has come back to life".
Analysts also noted that the dividend was maintained without Shell having to borrow, but warned: "The challenge is in their refining operations and the firm is struggling to produce mammoth profit there. However, updating infrastructure could help them to turn this around."
Meanwhile, Aslam pointed out that the market is expecting the price of oil to "move higher substantially" if relations between the US and Iran deteriorate – and they won't have been helped by Donald Trump's recently announced travel ban.
What Shell said
“We are reshaping Shell and delivered a good cash flow performance this quarter with over $9bn in cash flow from operations," said chief executive Ben van Beurden.
"Debt has been reduced and, for the second consecutive quarter, free cash flow more than covered our cash dividend.
"Looking ahead, we will further focus the portfolio and strengthen the company’s financial framework in 2017. Our strategy is starting to pay off and in 2017 we will be investing around $25bn in high quality, resilient projects. I’m confident 2017 will be another year of progress for Shell to become a world-class investment.”
In short
Shelling out to maintain its dividend has kept the oil major's confidence up.