Shell's profit fell to $28.3 billion last year, but the company will increase its dividend

British energy group Shell posted net profit of $28.25 billion (CZK 651 billion) last year, down almost 30 percent from the previous year. The company announced the figures today in a press release. However, the result beat analysts’ estimates, and the company said it would increase its dividend and continue buying back its shares.

The market had expected profits to fall, as earnings in 2022 were a record. They were boosted by a sharp rise in energy prices, partly driven by the impact of supply chain disruptions and the war in Ukraine. Last year, oil prices and natural gas prices were lower. Analysts surveyed by CNBC expected last year’s profit to fall to an average of $27.5 billion.

„At the start of 2024, we are continuing to simplify our organization. We are focused on delivering more value with lower emissions,” CEO Wael Sawan said about the company’s performance. He took up the position last January.

Shell also said its financial results would allow it to increase its dividend by four percent. The company returned almost $23 billion to shareholders last year, more than 40 percent of the free cash flow generated by its business. It will now extend its share buyback program by a further three months. During that period, it may buy back up to $3.5 billion worth of its shares, similar to the amount in the previous quarter. When companies buy back their shares, reducing the number of shares in circulation, the price of the remaining shares tends to rise.

For the fourth quarter, adjusted earnings, which the company defines as net profit, fell to $7.3 billion. However, this beat analysts’ estimates of $6 billion. A year earlier, net profit was a record $9.8 billion. Shell achieved very strong results in trading liquefied natural gas (LNG), which helped it offset weaker results from refining and trading oil in the fourth quarter.

Management proposed raising the dividend by four percent from the previous quarter, to $0.344 per share, a 20 percent increase year on year. This is the seventh dividend increase since the company’s historic cut in April 2020, prompted by the impact of the COVID-19 pandemic. It was the first dividend cut since the Second World War. In the UK and elsewhere, retirees are among those who rely on dividend income from large, stable companies such as Shell.

Shell is the first major energy company to announce its results for the whole of last year. Its US rivals ExxonMobil and Chevron will report their results on Friday, while British group BP and France’s TotalEnergies will do so next week. Shell shares have outperformed those of its competitors over the past year, rising by more than eight percent.