Shell (LON:RDSa) reported a third-quarter profit of $9.45 billion on Thursday. This was down from the record-high profit of the previous quarter, which was caused by weaker refining and gas trading. Shell also announced plans to sharply increase its dividend by the end of the year, when its CEO will be leaving.
Shell also said it would buy $4 billion worth of stock over the next three months as part of its share repurchase programme. In the last quarter, Shell bought $6 billion worth of stock.
The company said it plans to raise its dividend by 15% in the fourth quarter, when Ben van Beurden will step down as CEO after nine years. In March, the dividend will be paid.
Related: Shell’s Q3 results will be hurt by a drop in refining and gas trading.Â
When trading started in London, Shell shares were up 2.5%.
Wael Sawan, who is in charge of Shell’s natural gas and low-carbon division right now, will take over from Van Beurden.
So far this year, Shell has made a profit of $30.5 billion, which puts it on track to beat its record annual profit of $31 billion from 2008.
Strong earnings were likely to increase calls in Britain and the European Union for more windfall taxes on energy companies. This is because governments are having trouble paying for gas and electricity bills that are going up and up.
So far this year, Shell’s shares have gone up by more than 40%. This is because oil and gas prices have gone up because of Russia’s invasion of Ukraine in February and because oil and gas supplies are getting tighter around the world.
TotalEnergies, a competitor, made a record amount of money in the third quarter.
Shell’s quarterly profits are down from recent highs. https://graphics.reuters.com/SHELL-RESULTS/lbpgnwlwnvq/chart.png)
LNG WOES
The gas and renewables division, which is Shell’s biggest, saw a sharp 38% quarterly drop, which hurt the company’s adjusted quarterly earnings, which came in at $9.45 billion, which was just a little bit more than what was expected.
The company made a record of $11.5 billion in the second quarter.
The biggest trader of liquefied natural gas (LNG) in the world made 5% less LNG in the period compared to the same time last year. This was mostly because of ongoing strikes at its Australian Prelude facility.
This quarter, “supply constraints and large differences between paper and physical realisations in a volatile and dislocated market” hurt its gas trading business.
Due to lower refining margins, earnings from the refining, chemicals, and oil trading divisions also dropped sharply by 62% in the quarter.
Shell said it would stick to its plans to spend between $23 and $27 billion this year.
Related: Shell raises the value of its oil and gas assets by up to $4.5 billion.
Shell’s cash flow for the quarter dropped sharply from $18.6 billion to $12.5 billion. This was because the value of European gas inventories changed, which caused a large working capital outflow of $4.2 billion.
Shell’s net debt went up by about $2 billion, to $46.4 billion, because it made less money from operations and had to pay for a recent purchase. Its gearing, which is the ratio of debt to capital, also went above 20%.
(Shell’s annual profits: http://graphics.reuters.com/SHELL-RESULTS/lbvggrlzovq/chart.png)
