Shell to slow pace of share buyback program as profit slammed
Jan. 30, 2020 7:58 AM ET|About: Royal Dutch Shell plc (RDS.A)|By: Carl Surran, SA News Editor
Royal Dutch Shell (RDS.A, RDS.B) -3.3% pre-market and falling in London to the lowest in nearly three years after Q4 profit was cut in half from the prior-year quarter and the company said it would slow the pace of spending on its $25B stock buyback program.
CEO Ben van Beurden says Shell probably will miss its target of buying back $25B of shares by the end of 2020 if macroeconomic conditions do not approve; Shell currently is ~$10B short of the goal.
Shell reports Q4 net income adjusted for cost of supply fell to $2.9B from $5.7B, net profit attributable to shareholders tumbled to $965M from $5.6B, free cash flow sank to $5.4B from $16.7B, and total revenues fell 18% to $84B.
Shell executives said that if energy prices remain weak and refinery and chemicals margins stayed at current levels through 2020, cash flows could suffer another $7B-$10B hit.
Q4 gearing rose to 29.3% from 27.9%, and CEO Ben van Beurden says the figure likely will remain above its 25% target this year.
Earnings at Shell's gas business fell 47% Y/Y to $1.9B after higher trading activity failed to offset lower prices.
The exploration and production division reported a Q4 loss of $787M vs. a profit of $1.6B in the year-ago quarter due to lower oil prices and decommissioning costs; Q4 production of 2.8M boe was in line with the prior-year period.
Q4 earnings at Shell's downstream refining and chemicals business sank 64% to just ~$1B as weaker margins hurt profits.
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