Shell 2Q Adjusted Profit Beat Expectations -- Earnings Review

By Jaime Llinares Taboada

Royal Dutch Shell PLC reported results for the second quarter on Thursday. Here's what you need to know:

ADJUSTED CCS EARNINGS: The British-Dutch oil giant made an adjusted profit on a current cost of supply basis of $638 million. This was down 82% from a year earlier, as the pandemic hit demand and prices, but better than the consensus estimate of a $674 million adjusted loss--taken from the company's website and based on 23 forecasts. However, analysts said the outperformance was partially driven by the relatively unpredictable trading division.

WHAT WE WATCHED:

--DIVIDEND: As expected, Shell cut the dividend to $0.16 from $0.47, as it had done three months ago. However, Russ Mould from AJ Bell points out that Shell remains the third largest dividend payer in the FTSE 100 index.

--IMPAIRMENTS: The company's headline results were significantly hit by a $16.8 billion impairment relative to lowered medium- and long-term price expectations. This was toward the lower end of the $15 billion-$22 billion range previously provided by the oil major.

--COST SAVING PROGRESS: Shell cut underlying operating expenses by $2.23 billion to $18.34 billion in the first half of the year, and is therefore on track to meet its target of reducing 2020 operating costs by $3 billion-$4 billion. In addition, capital expenditure declined 21% to $8.59 billion in the period. The company has pledged to decrease 2020 capital expenditure to $20 billion or below.

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

(END) Dow Jones Newswires

July 30, 2020 07:13 ET (11:13 GMT)

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