Shell hits $6bn profit for Q1 2019, distributes $3.9bn dividends

Royal Dutch Shell Plc has released its first quarter 2019 result. According to the official earning declaration on its website, the company announced a $6 billion profit attributable to shareholders.

The leading oil company recorded a 7 percent increase in profit between the fourth quarter of 2018 and the first quarter of 2019. In Q4 2018, the company recorded $5.59 billion. Similarly, year-on-year, Shell recorded a 2 percent profit between the first quarter of 2018 ($5.59bn) and the first quarter of 2019.

CCS Earnings: Shell also announced CCS earnings attributable to shareholders excluding identified items estimated at $5.3 billion. According to the company, this reflects lower realised chemicals and refining margins, decreased realised oil prices, and lower tax credits.

On a current cost of supplies basis, our Q1 2019 earnings attributable to shareholders, excluding identified items, were $5.3 billion, down 2% from $5.4 billion for the first quarter of 2018. #ShellResults More: https://t.co/vGPSyxSRPc pic.twitter.com/wTiHaOsht4

— Shell (@Shell) May 2, 2019

However, the company explained that this was partly offset by stronger contributions from trading as well as increased realised LNG and gas prices compared with the first quarter of 2018. In addition, there was a negative impact of $43 million related to the implementation of IFRS 16.

Cash flow from operating activities: Cash flow from operating activities for the first quarter 2019 period was estimated at $8.6 billion. This included negative working capital movements of $3.5 billion, leading to cash flow from operating activities excluding working capital movements of $12.1 billion.

Also, this excludes working capital movements and a positive impact of $949 million related to the implementation of IFRS 16. Basically, cash flow from operating activities increased to $11.3 billion compared with $10.4 billion in the first quarter of 2018, mainly due to a higher cash-generative portfolio of assets.

“AS A RESULT OF THE IMPLEMENTATION OF IFRS 16, NET DEBT INCREASED BY $16,170 MILLION. FIRST QUARTER 2019 REPORTED GEARING INCREASED TO 26.5% ON AN IFRS 16 BASIS, FROM 21.9% ON AN IAS17 BASIS.”

Dividends distributed and launching of share buyback programme: The company further stated that a total of $3.9 billion dividends were distributed to shareholders in the first quarter of 2019. Shell also announced that it will launch the next tranche of the share buyback programme, with a maximum aggregate consideration of $2.75 billion in the period up to and including July 29, 2019.

In aggregate, since the launch of the share buyback programme, 215.7 million A ordinary shares were bought back for cancellation for a consideration of $6.75 billion.

How Shell achieved this feat in the first quarter: Highlighting the strength of its financial performance, the company’s Chief Financial Officer, Jessica Uhl, in a video clip obtained on the website highlighted major events in the first quarter of 2019.

  • Production started in Lula north deepwater field in Brazil
  • The U.S Gulf of Mexico made a significant discovery at Blacktip prospect encountering more than 400 feet net oil pay.
  • In two month of the first quarter, 250 sites were discovered across China, India, Mexico, Indonesia and Russia.
  • Retail product increased presence in key markets.

While commenting on the company’s financial performance in the first quarter of 2019, the  Shell Chief Executive Officer, Ben van Beurden, disclosed that the growth recorded further demonstrates the strength of our strategy and the quality of our portfolio of assets.

“SHELL HAS MADE A STRONG START TO 2019, WITH THE FIRST QUARTER FINANCIAL PERFORMANCE DEMONSTRATING THE STRENGTH OF OUR STRATEGY AND THE QUALITY OF OUR PORTFOLIO OF ASSETS. THE POWER OF OUR BRAND, SERVING MILLIONS OF CUSTOMERS EVERY DAY, CONTINUES TO BE A DIFFERENTIATOR. OUR INTEGRATED VALUE CHAIN ENABLED OUR DOWNSTREAM BUSINESS TO DELIVER ROBUST RESULTS DESPITE CHALLENGING MARKET CONDITIONS.”– BEURDEN

The Company’s Outlook and Investors’ relations: The CEO further stated that the company’s consistent financial performance across all business provides confidence in meeting 2020 outlook.

While giving further highlights on the company’s performance and investor’s relations, the CFO further disclosed that the company’s financial performance shows a strong start for the year.

Jessica also stated that despite the market challenging conditions, the strength of the company’s strategy and quality portfolio assets are responsible for the robust result.

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