Shell Swings to 4Q Net Loss, Performance Misses Expectations -- Update

--Shell ended 2020 with a $4 billion loss in the fourth quarter, dragged by impairments and other one-offs

--Adjusted CCS earnings came in at a profit but below the market consensus

--Net debt increased to more than $75 billion.

By Jaime Llinares Taboada

Royal Dutch Shell PLC on Thursday posted a loss for the fourth quarter of the year as its underlying performance was worse than expected.

The Anglo-Dutch oil-and-gas major booked a net loss of $4.01 billion for the three months to Dec. 31, swinging from a $489 million profit for the third quarter and a $965 million profit for the fourth quarter of 2019. This was largely caused by impairment charges of $2.7 billion and $1.1 billion in costs related to contract provisions.

The full-year loss was $21.68 billion compared with a $15.84 billion profit for 2019.

Fourth-quarter adjusted earnings on a current cost of supplies basis came in at $393 million, down from $955 million in the third quarter and below the market consensus of $597 million, taken from Vara Research and based on 25 analysts' forecasts. The metric is a figure similar to the net income that U.S. oil companies report, but strips out exceptional items.

Adjusted CCS earnings were been $2.93 billion in the fourth quarter of 2019. The FTSE 100 company said the on-year decline was driven by lower realized prices for oil and liquefied natural gas, as well as lower production and realized refining margins.

Operating cash flow fell to $6.29 billion from $10.40 billion for the third quarter and from $10.27 billion for a year earlier.

Shell declared a quarterly dividend of $0.1665, bringing the full-year payment to $0.653--down from $1.88 in 2019. In addition, the company anticipated a payment of $0.1735 a share for the first quarter of 2021.

Net debt as at the end of the year was $75.4 billion, up from $73.5 billion at the end of the third quarter, driven by lower free cash flow generation and lease additions.

Shell has a target to reduce net debt to $65 billion before distributing 20%-30% of cash flow from operations to shareholders through dividends and share buybacks.

Looking ahead, Shell warned that headwinds will continue in the first quarter of 2021. "As a result of the Covid-19 pandemic, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products."

Write to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

February 04, 2021 02:57 ET (07:57 GMT)

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