Page 4 - EurOil Week 31 2021

EurOil COMMENTARY EurOil

Shell boosts investor appeal

Shell has worked to placate investors since making a two-thirds cut to its

dividend at the onset of the pandemic last year

GLOBAL ROYAL Dutch Shell has continued efforts to its improved balance sheet, as justification for
boost its investor appeal, announcing on July 29 the policy.
WHAT: that it would buy back $2bn of shares and raise Shell posted $5.53bn in adjusted income in
Shell is increasing its its dividend by 40%. the three months ending June 30, in an increase
dividend by 40% and The promise of greater rewards to sharehold- from $3.23b in the previous quarter and a mere
launching a $2bn share ers comes after Shell reported its highest quar- $0.62bn in the second quarter of 2020. This
buyback programme. terly profits since 2018. The company took the was the major’s best quarterly result since the
tough decision in April last year to cut its divi- final three months of 2018, when it generated
WHY: dend by two thirds, while most of its peers took $5.69bn.
The company is eager to less austere steps. The move was praised by ana- The biggest gain was seen at Shell’s upstream
increase distributions lysts at the time as sensible, but it was also one business, which achieved $2.47bn in earnings
after posting its highest that was detrimental to Shell’s investment case. versus $1.5bn in losses a year earlier. Earnings
quarterly earnings since Since then, Shell has worked to placate inves- from the integrated gas business also multi-
2018. tors by steadily increasing its dividend again. It plied to $1.61bn from $362mn, although Shell’s
raised the payout from $0.16 to $0.1165 per share oil products division suffered a near halving in
WHAT NEXT: in October last year, and then to $0.1735 for the earnings to $1.3bn from $2.41bn. Earnings from
Shell has said it will not first quarter of this year. It has now increased it to chemicals more than tripled to $670mn from
alter its energy transition $0.24 per share for the second quarter. $206mn a year earlier.
strategy, despite a While this is still much lower than the “Shell was ready to show off the cash and
landmark Dutch court pre-pandemic dividend of $0.47 per share, Shell return it as the second quarter marked an impor-
ruling on its emissions has promised to increase payments by 4% annu- tant inflection on demand recovery,” JPMor-
reduction targets. ally from now on. It also said it would finish its gan Chase & Co said in a research note. These
$2bn buyback by the end of the year. changes “should see shares perform well today.”
“We are stepping up our shareholder dis- Shares in Shell hit a high of GBP1.47 ($2.05)
tributions today, increasing dividends and per share on July 29, up from GBP1.395 at the
starting share buybacks, while we continue to previous close of trade.
invest for the future of energy,” Shell CEO Ben
van Beurden said. He pointed to the company’s Risks in transition
strong operational and financial numbers, and While things are looking up on the commercial

P4 www. NEWSBASE .com Week 31 05•August•2021