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Shell profits beat forecasts

Shell has reported better than expected profits for the first quarter of the year, having benefited from a stronger performance in oil trading and a recovery in refining margins

By: N. Peter Kramer - Posted: Wednesday, May 8, 2024

The chief executive of Shell, Wael Sawan, said that returning capital to shareholders continued to be a bigger priority than major mergers and acquisitions. ‘We still see that our share price is not reflective of the underlying valuation of the company’, he told The Times.
The chief executive of Shell, Wael Sawan, said that returning capital to shareholders continued to be a bigger priority than major mergers and acquisitions. ‘We still see that our share price is not reflective of the underlying valuation of the company’, he told The Times.

by N. Peter Kramer

Shell has reported better than expected profits for the first quarter of the year, having benefited from a stronger performance in oil trading and a recovery in refining margins. Europe’s biggest oil and gas company reported adjusted earnings of $7.7 billion during the first three months, higher than the $6.5 billion that analysts had forecast.

It was announced that Shell would buy back $3.5 billion of its shares. It marks the seventh consecutive quarter that the company has announced buybacks in the $3 billion to $4 billion range. The buybacks come on top of a first quarter dividend of 34,4 cents a share, an increase of 20 per cent on the payout in the first quarter last year.

The chief executive of Shell, Wael Sawan, said that returning capital to shareholders continued to be a bigger priority than major mergers and acquisitions. ‘We still see that our share price is not reflective of the underlying valuation of the company’, he told The Times.

Shell’s share price is still lower rated than US rivals Exxon and Chevron. But Sawan insisted he was not worried that this valuation gap had not yet closed. Therefore switching the Shell listing from London to New York is suggested to close the valuation gap. ‘The whole issue is not one of the London market, there are just basic fundamentals we have to work on’, he said, pointing towards a cost base and capital expenditure that was previously too high.

Shell also faces a resolution filed by a group of shareholders, which collectively own 2.5 per cent of the shares, urging the company to set tighter climate targets. Shell has said shareholders should vote against the resolution. ‘What is being proposed is not aligned with shareholder interests,’ Sawan said, or what its customers wanted, and was ‘bad governance’.

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