Shell: third-quarter strong, but buybacks disappoint
(CercleFinance.com) - Lower oil and gas prices, and margins chemicals, took their toll on Royal Dutch Shell's third-quarter profit, as seen in the company's results that were unveiled on Thursday.
Shell said earnings fell to around 4.8 billion dollars in the past quarter, from 5.6 billion dollars a year ago on a current cost of supplies basis (CCS), a figure that was 22% above the consensus.
Excluding non-operating and one-off items, the group's result reached 6.1 billion dollars, up 15% from the 5.6 billion dollars in the third quarter of 2018.
The Anglo-Dutch oil giant said that it benefited from stronger contributions from LNG and oil products trading and optimisation, as well as higher realised margins in retail and global commercial.
However, benchmark US crude prices averaged about 55 dollars per barrel in the past quarter, down from around 70 dollars in the third quarter of 2018.
Shell shares are down 2.5% at 2,270 pence in morning trading, with traders saying the fall was due to a disappointment in the group's outlook in terms of share buybacks.
"The company has flagged that the macro conditions mean that the buyback programme for 2020 may not be fully completed, as Shell may not be able to afford the buyback," Berenberg noted.
Indeed, Shell launched the next tranche of its share buyback program today, with a maximum amount of 2.75 billion dollars to be repurchased in the period up to and including January 2020.
However, the group warned that weak macroeconomic conditions and a challenging outlook create "uncertainty" about the pace of reducing gearing to 25% and completing the share buyback program within the 2020 timeframe.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
Shell said earnings fell to around 4.8 billion dollars in the past quarter, from 5.6 billion dollars a year ago on a current cost of supplies basis (CCS), a figure that was 22% above the consensus.
Excluding non-operating and one-off items, the group's result reached 6.1 billion dollars, up 15% from the 5.6 billion dollars in the third quarter of 2018.
The Anglo-Dutch oil giant said that it benefited from stronger contributions from LNG and oil products trading and optimisation, as well as higher realised margins in retail and global commercial.
However, benchmark US crude prices averaged about 55 dollars per barrel in the past quarter, down from around 70 dollars in the third quarter of 2018.
Shell shares are down 2.5% at 2,270 pence in morning trading, with traders saying the fall was due to a disappointment in the group's outlook in terms of share buybacks.
"The company has flagged that the macro conditions mean that the buyback programme for 2020 may not be fully completed, as Shell may not be able to afford the buyback," Berenberg noted.
Indeed, Shell launched the next tranche of its share buyback program today, with a maximum amount of 2.75 billion dollars to be repurchased in the period up to and including January 2020.
However, the group warned that weak macroeconomic conditions and a challenging outlook create "uncertainty" about the pace of reducing gearing to 25% and completing the share buyback program within the 2020 timeframe.
Copyright (c) 2019 CercleFinance.com. All rights reserved.