In the face of unprecedented challenges, Shell’s second-quarter earnings have been far from satisfactory. The oil giant reported adjusted earnings of $5.07 billion, which pales in comparison to the record-breaking $11.5 billion profit posted during the same period last year. This drastic drop of 56% serves as a stark reminder that the era of excessive profits for the world’s largest oil-and-gas companies has come to an end.
Shell attributes this decline in profit to lower oil and gas prices, shrinking refining margins, reduced volumes, and a decline in liquefied natural gas trading. And as Exxon Mobil and Chevron Corporation prepare to report their earnings, investors are being urged to lower their expectations. However, there is a silver lining for Chevron, as their earnings are projected to be slightly better than expected, despite still anticipating a 47% drop in earnings per share.
Despite the disappointing results, Shell remains committed to enhancing shareholder value. The company has announced a $3 billion share buyback program and increased its quarterly dividend by an impressive 15% to $0.331 per share.
While the decline in profit was anticipated due to plummeting prices, Shell’s earnings fell short of expectations. FactSet data reveals that the oil major’s earnings of 75 cents per share were lower than analysts’ estimated 85 cents per share. Consequently, the company’s London-listed stock experienced a 1.8% drop in early trading, with a year-to-date increase of just 1%. To put this into perspective, the stock had surged by an impressive 43% in 2022.
In conclusion, Shell’s second-quarter earnings have taken a substantial hit as market conditions return to a sense of normality. Despite this setback, the company remains focused on delivering value to its shareholders through strategic initiatives and maintaining their commitment to investor returns.
Investor note: Keep an eye out for upcoming earnings reports from Exxon Mobil and Chevron Corporation.
