In March the Shell share price hit its highest levels since June 2019 in the aftermath of a record set of full year numbers which saw profits soar to a record $39.87bn, over double the numbers returned in 2021, and comfortably beating the previous record set in 2008 of $28.4bn.
Since then, the share price has slipped back on a combination of concern over a slowdown in demand, as well as sharp declines in the prices of oil and gas.
As with BP, earlier this week, today’s Q1 numbers from Shell will once again set off the customary chorus of political flatulence over obscene profits, and a desire to impose a higher windfall tax over above the current 75%, even though it has already done an enormous amount of damage to the smaller North Sea operators.
While it was widely expected that today’s Q1 profits would see a modest slowdown, they have come in much better than expected at $9.6bn, only a modest decline from Q4’s $9.8bn, on revenues of $86.96bn.
This is well above the same quarter last year, with integrated gas contributing $4.9bn to the overall profit numbers, a $1.1bn decline from Q4, but still the second highest number ever. Shell also maintained its dividend at 28.75c a share and announced another $4bn share buyback for the quarter.
Other key areas of outperformance were in chemicals and products which saw a big jump in profits of over $1bn to $1.78bn, primarily due to a big jump in margins. Renewables and energy solutions saw profits rise to $400m, from $300m in Q4.
The announcement that Shell has maintained its buyback at $4bn has seen the shares edge higher in a move that is likely to be further political catnip to its detractors. On the tax front Shell paid $3.1bn in tax during the quarter although there was no detail as to how this was broken down.
In Q4 Shell paid $1.7bn in respect of the EU solidarity contribution and the UK’s Energy Profits Levy, $441m of which went to the UK government.
Net debt levels only fell modestly from $44.8bn to $44.2bn, while keeping its total capex outlook for 2023 unchanged at between $23bn and $27bn.
Earlier this year Shell said it was looking to integrate its oil and gas and LNG divisions as part of a broader effort to streamline the business.
The renewables operation will be rolled into the oil refining and marketing operations and will take place from 1st July. We should hear more details of how this will be done in June when the company holds a capital markets day.
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.