Shell 1Q CCS Earnings Nearly Halved But Beat Consensus -- Earnings Review

By Jaime Llinares Taboada

Royal Dutch Shell PLC on Thursday reported market-beating CCS earnings for the first quarter of the year, but slashed its dividend for the first time since World War II. Here's what you need to know:

CCS EARNINGS: The Anglo-Dutch oil giant's adjusted earnings on a current cost of supplies basis--a figure that is similar to the net-profit figure U.S. oil companies use, but excludes one-off items--fell 46% to $2.86 billion in the first quarter but remained above the $2.25 billion consensus of 27 brokers compiled by Vara Research.

UPSTREAM PROFIT: Shell's upstream earnings profit excluding identified items plunged 82% to $291 million and was below the $468 million consensus.

WHAT WE WATCHED:

--IMPAIRMENTS: Shell said that it booked impairment charges of $749 million mainly due to changes to the oil-price outlook for 2020. The group had warned in late March that it would include a charge of between $400 million and $800 million in this regard.

--COST SAVING PROGRESS: Capital expenditure declined 11% to $4.97 billion compared with the first quarter of 2019. Shell had said it would reduce 2020 investments below $20 billion from the original $25 billion plan. Including reductions to operating costs, the company is seeking to save between $8 billion and $9 billion this year.

--DIVIDEND: Shell cut the first quarter dividend to $0.16 a share from last year's $0.47 to preserve its balance sheet and "bolster" its resilience in these uncertain times. The brokers included in Vara's consensus had not predicted the slash.

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

(END) Dow Jones Newswires

April 30, 2020 06:25 ET (10:25 GMT)

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