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LONDON (Reuters) – Shell (LON:RDSa) on Thursday posted first-quarter net profit of $9.65 billion, topping analysts’ forecasts, as strong earnings from fuel trading and higher liquefied natural gas (LNG) sales offset cooling energy prices.
The stronger-than-expected profits followed a string of forecast-beating results from rivals including BP (NYSE:BP) and Exxon Mobil (NYSE:XOM) as the sector continues to benefit from strong demand and price volatility. Norwegian rival Equinor on Thursday also posted higher-than-expected quarterly profits.
Lower natural gas prices in the quarter weighed on Shell’s giant integrated gas business, with profits slumping 18% to $4.9 billion. But this was broadly offset by a 139% jump in profits to $1.8 billion in its chemicals and refined products unit.
Shell shares were up 2% by 0830 GMT.
Shell, the world’s top LNG trader, said LNG production rose in the quarter thanks to higher uptime at its Prelude floating facility off the coast of Australia.
Shell kept its dividend unchanged at $0.2875 per share and also kept the rate of its share repurchase programme stable at $4 billion over the next three months, even as its cash generation fell in the quarter. It bought back $19 billion in shares in the year to February 2023, nearly double the total in pre-pandemic 2019.
“In Q1, Shell delivered strong results and robust operational performance, against a backdrop of ongoing volatility,” Chief Executive Officer Wael Sawan said in a statement.
GRAPHIC – Shell’s LNG production and sales
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PROFITS BEAT
Shell reported adjusted earnings of $9.65 billion in the first quarter, exceeding a company-provided analyst forecast of $8 billion. The company’s shares rose 2.5% in early London trading.
That compared with earnings of $9.1 billion a year earlier and $9.8 billion in the fourth quarter of 2022, when Shell reported a record annual profit of $40 billion.
Shell showed “strong operational performance in the quarter across all divisions with oil and gas trading playing a key role,” Jefferies analyst Giacomo Romeo said in a note.
Benchmark Brent crude oil prices averaged $81 per barrel in the first three months of the year, down 16% from a year earlier, while Europe’s benchmark TTF front-month wholesale gas contract has fallen 50% so far this year.
The British company maintained its 2023 capital spending plans unchanged in a range between $23 and $27 billion.
Sawan has introduced a new management structure since taking office in January, including placing its renewables and low-carbon operations under the downstream division.
GRAPHIC – Shell’s quarterly profits
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GRAPHIC – Shell’s cash generation
https://www.reuters.com/graphics/SHELL-CASH/akpeqjwjepr/chart.png
