(Alliance News) - Royal Dutch Shell PLC reported a significant fall in annual earnings on Thursday, driven by a decline in oil and gas prices.
Shell's 2019 current cost of supplies earnings attributable to shareholders excluding items, its preferred profit metric, fell 23% to USD16.46 billion, which is short of market consensus of USD16.74 billion.
The figure for the fourth quarter of the year slumped 48% to USD2.93 billion, and was around half the third-quarter figure.
CCS earnings attributable to shareholders excluding items had risen 36% in 2018, boosted by higher commodity prices, but Shell said 2019 earnings "reflected lower realised oil, gas, and liquefied natural gas prices, and weaker realised refining and chemicals margins".
Shell's CCS earnings attributable to shareholders for the year dipped 36% to USD15.27 billion, with the fourth quarter figure down 88% to USD871 million.
CCS earnings excluding identified items in 2019 fell 23% to USD17.00 billion, slipping 47% for the last quarter to USD3.06 billion.
Shell's cash flow from operations for 2019 fell 21% to USD42.18 billion, and for the final quarter was 53% lower at USD10.27 billion. The market had seen annual cash flow at USD42.89 billion.
Revenue fell 11% to USD344.88 billion. Production for 2019 was flat at 3.67 million barrels of oil equivalent per day, with the fourth quarter figure down 1% at 3.76 million barrels per day.
Shell is paying a USD0.47 quarterly dividend, as expected by the market, taking the annual total to USD1.88, again as expected. This means no annual dividend increase.
Shell is to start the next tranche of its ongoing USD25 billion share buyback for 2018 to 2020. It has so far bought back USD14.75 billion of that, and will purchase USD1 billion more to April 27.
Shell did warn that the pace of the current buyback programme is subject to macroeconomic conditions and the company's progress in reducing debt.
However, debt actually rose in 2019. Net debt as of the end of December was USD79.09 billion, rising 5.9% over the fourth quarter. Gearing increased 29.3% from 27.9%.
"The strength of Shell's strategy and portfolio has enabled delivery of competitive cash flow performance in 2019 despite challenging macroeconomic conditions in refining and chemicals, as well as lower oil and gas prices," said Chief Executive Ben van Beurden.
"We generated USD47 billion in cash flow from operating activities excluding working capital movements and distributed over USD25 billion in dividends and share buybacks to our shareholders."
"We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks. Our intention to complete the USD25 billion share buyback programme is unchanged, but the pace remains subject to macro conditions and further debt reduction," he continued.
By George Collard; georgecollard@alliancenews.com
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