* Profits surge to $5.5 bln, highest since late 2018
* Shell boosts dividend by 38%
* Launches $2 billion share buyback
(Adds shares, analyst comment)
By Ron Bousso
LONDON, July 29 (Reuters) - Royal Dutch Shell
boosted its dividend and launched a $2 billion share buyback
programme on Thursday after a sharp rise in oil and gas prices
drove second quarter profits to their highest in more than two
years.
As profits across the industry recovered from last year's
pandemic-led collapse in energy demand, peers TotalEnergies
and Norway's Equinor also announced share
buybacks.
Shell's London-traded shares rose by over 3% by 0711 GMT,
outperforming peers BP and TotalEnergies.
The Anglo-Dutch company saw a surge in cash generation,
boosted by higher commodity prices and a recovery in global
energy demand, which also helped it to cut debt.
"We are stepping up our shareholder distributions today,
increasing dividends and starting share buybacks, while we
continue to invest for the future of energy," Shell Chief
Executive Ben van Beurden said in a statement.
Adjusted earnings rose to $5.53 billion, the highest since
the fourth quarter of 2018, exceeding an average analyst
forecast provided by the company for a $5.07 billion profit.
That compares with earnings of $638 million a year earlier.
Apart from higher fuel prices, stronger profits from Shell's
marketing division, the world's biggest network of petrol
stations, also boosted the results.
Still, fuel sales in the quarter were well below
pre-pandemic levels at 4.5 million barrels per day (bpd) in the
second quarter, up 9% from 4.16 million bpd in the first
quarter.
DIVIDEND INCREASE
Shell increased its dividend for a second consecutive
quarter by 38% to 24 cents, a year after it cut its dividend for
the first time since the 1940s in response to the collapse in
energy demand caused by the pandemic.
The company also launched a $2 billion share buyback
programme that it aims to complete by the end of the year.
Shell said earlier this month that it will boost its
distribution to shareholders via share buybacks or dividends to
20% to 30% of cash flow from operations beginning in the second
quarter, earlier than expected.
"We knew Shell was set to raise distributions today but the
scale of the increase is significantly above expectations,"
Redburn analyst Stuart Joyner said in a note.
Free cashflow, a metric of the company's performance
following deep cost cuts last year, rose in the quarter to $9.7
billion, its highest since the first quarter of 2020.
The strong results provide relief for Shell, which faces
mounting pressure over its strategy to tackle climate change
after a Dutch court in May ordered the company to significantly
accelerate its greenhouse gas emissions reduction
targets.
Shell said it will appeal the court ruling, but at the same
time it aims to accelerate its plan to cut emissions following a
strategy overhaul announced last year to build a large
low-carbon business.
(Reporting by Ron Bousso; Editing by Edmund Blair and Barbara
Lewis)
