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CNBC: Shell shares sink as full-year net profit tumbles 23% on lower oil and gas prices

Sam Meredith @SMEREDITH19: PUBLISHED THU, JAN 30 20202:08 AM EST
KEY POINTS
  • Net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items,  used as a proxy for net profit, came in at $16.462 billion for full-year 2019.
  • That compared with a profit of $21.404 billion for full-year 2018, reflecting a year-on-year drop of 23%.
  • The Anglo-Dutch energy giant warned last month that it would book additional charges against its income in the fourth quarter.

Oil giant Royal Dutch Shell reported a sharp fall in full-year net profit on Thursday, citing challenging macroeconomic conditions and lower oil and gas prices.

Net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items, which is used as a proxy for net profit, came in at $16.462 billion for the full-year 2019. That compared with a profit of $21.404 billion for full-year 2018, reflecting a year-on-year drop of 23%.

Analysts had expected full-year 2019 net income attributable to shareholders on a CCS basis, and excluding identified items, to come in at $17.770 billion, according to data from Refinitiv.

Shell repeated a warning on Thursday that a global economic slowdown could impact the pace of its $25 billion share buyback program but the energy giant’s chief executive has reaffirmed his intent to complete it.

“If we want to do everything that we said we needed to do, which is continue to invest in growth, continue to buy back shares — $25 billion worth of it — and reduce the net debt then, of course, the macro will probably force some choices on us,” Ben van Beurden, CEO of Royal Dutch Shell, told CNBC’s “Squawk Box Europe” on Thursday.

“We are not in the process of making quarterly updates of what we think of the macro but we will be very clear that our strategy and our intentions are completely unchanged from what they were in June last year,” he added.

Shares of Shell tumbled toward the bottom of the European benchmark during early morning deals, down more than 4% shortly after the opening bell.

Here are the key highlights:

  • Net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items came in at $16.462 billion for the full-year, down 23% for full-year 2018.
  • Net income attributable to shareholders on a CCS basis, and excluding identified items, came in at $2.931 billion for the fourth quarter, down 48% when compared to the same quarter a year ago.
  • Shell launched the next tranche of the share buyback program on Thursday, with a maximum aggregate consideration of $1 billion in the period up to and including April 27, 2020.

Shell also took a $1.6 billion charge on its U.S. gas fields in the final three months of last year. It comes after the Anglo-Dutch energy giant warned last month that it would book additional charges against its income in the fourth quarter.

International benchmark Brent crude traded at $58.99 Thursday morning, down more than 1.3%, while U.S. West Texas Intermediate (WTI) stood at $52.57, around 1.4% lower.

Both crude benchmarks slumped to multi-month lows earlier in the week, as energy market participants try to assess the potential impact of China’s coronavirus on oil demand growth.

Chinese health officials confirmed there had been 7,711 cases of the deadly pneumonia-like virus at the end of Wednesday, with 170 deaths.

The World Health Organization’s (WHO) Emergency Committee is set to reconvene on Thursday, with officials poised to decide whether the outbreak constitutes a global health emergency.

BP and Total are both expected to report their latest quarterly figures next week.

SOURCE

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