Prime Highlights:
Shell posted adjusted earnings of $23.72 billion for 2024, a decrease from $28.25 billion in 2023, missing analysts’ expectations of $24.71 billion.
The company announced a 4% increase in its dividend per share.
Shell launched a $3.5 billion share buyback program, expected to be completed within three months.
Key Background:
Shell, the British energy giant, has reported a significant drop in its annual profit for 2024, attributing the decline to higher exploration write-offs, reduced trading margins, and weaker crude prices in the final quarter of the year. The company posted adjusted earnings of $23.72 billion for the full year, down from $28.25 billion in 2023. This result fell short of analysts’ expectations, which had predicted a profit of $24.71 billion.
Despite the profit miss, Shell remains committed to returning value to shareholders. The company announced a 4% increase in its dividend per share and unveiled a $3.5 billion share buyback program, expected to be completed within the next three months. Shares of the London-listed company saw a nearly 3% rise following the announcement.
The company’s weaker-than-expected performance in the final quarter of 2024, which saw adjusted earnings of $3.66 billion, was primarily influenced by fluctuating commodity prices. Oil prices in 2024 averaged $80 per barrel, down from nearly $140 per barrel in 2022, following the Russian invasion of Ukraine. This cooling of oil prices, coupled with reduced global demand, impacted earnings, particularly in Shell’s chemicals and oil products division.
Looking ahead, Shell’s CEO, Wael Sawan, remains cautious about the future, acknowledging potential uncertainties and volatility in 2025. Sawan emphasized that 2024 was a strong year that laid a solid foundation for the company’s future initiatives, including its strategy to close the valuation gap with U.S. peers.
Furthermore, Shell continues to prioritize its oil and gas operations while scaling back investments in green energy sectors such as offshore wind and hydrogen. Despite these shifts, the company remains focused on its goal to achieve net-zero emissions by 2050. Overall, Shell’s robust cash flow generation and commitment to shareholder returns provide a mixed but resilient outlook, as the company navigates ongoing challenges in the energy sector.