The Rising Influence of Rising Affluence

[DewDiligence]

Shell soars on $8-9B cost-cutting plan—no dividend cut:

https://finance.yahoo.com/news/shell-acts-reinforce-business-resilience-070000955.html

Today, we are announcing that we have embarked on a series of operational and financial initiatives that are expected to result in:

• Reduction of underlying operating costs by $3-4 billion per annum over the next 12 months compared to 2019 levels;

• Reduction of cash capital expenditure to $20 billion or below for 2020 from a planned level of around $25 billion; and

• Material reductions in working capital.

Together, these initiatives are expected to contribute $8-9 billion of free cash flow on a pre-tax basis.

…The Board of Royal Dutch Shell has decided not to continue with the next tranche of the share buyback programme following the completion of the current share buyback tranche.

…Shell’s liquidity remains strong, with around $20 billion in cash and cash equivalents, $10 billion of undrawn credit lines under our revolving credit facility and access to our extensive commercial paper programmes.

Notice anything missing? Shell is not cutting the dividend—at least for now.

At today’s closing prices, RDS-A yields 15.0% and RDS-B yields 15.7%. (See the next post re the discrepancy between the two classes of shares).