Shell focused on ‘delivering more value’ as speculation around US listing swirls
FTSE 100 giant Shell has today reported a 15 per cent jump in earnings before interest, tax, deprecation and amortisation (EBITDA) for the first quarter.
In its trading update for the three months to the end of March, the company said adjusted EBITDA rose from $16.3bn (£13bn) in the fourth quarter of 2023 to $18.7bn (£14.9bn) in the first quarter of 2024.
However, this figure was lower than the $21.4bn (£17bn) reported for the same period in 2023.
The company said these results: “Reflected lower operating expenses, higher margins from crude and oil products trading and optimisation, and higher refining margins, partly offset by lower LNG trading and optimisation margins, and unfavourable tax movements in comparison to the fourth quarter 2023.”
Shell paid out $5bn (£4bn) to shareholders during the first quarter, a combination of both dividends (£1.8bn) and share buybacks (£2.2bn)).
Today, the group laid out plans to return a further $3.5bn (£2.8bn) of repurchases following the completion of the $3.5bn (£2.8bn) buyback initiated in the fourth quarter of last year.
Shell chief executive officer Wael Sawan commented: “Shell delivered another quarter of strong operational and financial performance, demonstrating our continued focus on delivering more value with less emissions. We continue to deliver on our capital markets day targets, giving us the confidence to commence another $3.5 billion buyback programme for the next three months.”
Total shareholder distributions in the fourth quarter amounted to $6.2bn (£4.9bn).
Shell reported a free cash flow for the period of $9.8bn (£7.8bn), only slightly below the $9.9bn ( £7.9bn) reported in the first quarter of 2023.
Its strong free cash flow allowed the group to reduce gearing further during the period. Gearing fell from 18.8 per cent at the end of 2023 to 17.7% at the end of March.
The company ended the period with net debt of $40.5bn (£32.3). The lower debt level reflected: “Free cash flow, partly offset by share buybacks, cash dividends paid to Shell plc shareholders, interest payments, and lease additions.”
Over the coming year the group said it expected to spend $22bn (£17.5) to $25bn (£19.9bn) on capital projects – in line with the goals laid out at the company’s capital markets event last year.
Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “Shell has beaten expectations by a reasonable margin, despite the impact of lower gas prices during the first quarter. Earnings are up, costs have fallen, and the oil and gas major has brought debt down too – all in all, it’s a solid set of numbers and underlines why the market, generally, remains bullish on Shell.
“Investors were looking for reassurance on volumes and capital discipline, as these ultimately feed through to cash returns. Today’s update has delivered on both fronts, with the addition of an extension to the share buyback programme,” Lamont added.
Today’s update followed recent comments from the company’s CEO and former CEO about Shell’s valuation.
“I will keep buying back those shares, and buying back those shares at a discount,” he added.