LONDON, Oct 27 (Reuters) – Shell (SHEL.L) Third-quarter profit on Thursday of $9.45 billion eased from a record high in the previous quarter due to weaker refining and gas trading as it announced plans to sharply raise its dividend at the end of the year when its CEO leaves.
Shell also extended its share repurchase program, announcing plans to buy back $4 billion in shares over the next three months after completing $6 billion in the previous quarter.
The company said it plans to increase its dividend by 15% in the fourth quarter, as CEO Ben Van Beurden steps down after nine years at the helm. Dividend will be paid in March.
Shell shares rose 2.5% after trading opened in London.
Wael Sawan, the current head of Shell’s natural gas and low-carbon division, will succeed Van Beurden.
With profits of $30.5 billion so far this year, Shell is on track to surpass its record annual profit of $31 billion in 2008.
The strong earnings could intensify calls in Britain and the EU for more windfall taxes on energy companies.
Shares of Shell have soared more than 40% so far this year, as oil and gas prices surged in the wake of Russia’s invasion of Ukraine in February and amid tightening global oil and gas supplies.
Rival Total Energies posted record profits in the third quarter.
[1/2] A view shows a sign with Shell’s logo at the company’s fuel station in St. Petersburg, Russia on May 6, 2022. REUTERS/Anton Vaganov/File Photo
LNG WOES
Quarterly adjusted revenue of $9.45 billion, which slightly beat forecasts, was hit by a sharp 38% quarter-on-quarter drop in Shell’s largest gas and renewables division.
Second quarter revenue was $11.5 billion.
The world’s largest liquefied natural gas (LNG) trader produced 7.2 million tonnes of LNG, down 5% from last year, mainly due to strikes at its Australian prelude facility.
Its gas trading business was hit this quarter by “supply constraints, coupled with significant differences between paper and physical realizations in a volatile and volatile market.”
The Refining, Chemicals and Oil trading segment’s revenue fell sharply by 62% in the quarter due to weaker refining margins.
Shell said it is sticking to its plan to spend $23-$27 billion this year.
Shell’s cash flow fell sharply to $12.5 billion from $18.6 billion in the previous quarter due to a large working capital outflow of $4.2 billion as a result of changes in the value of European gas inventories.
Shell’s net debt rose about $2 billion to $46.4 billion as it paid for lower cash flow from operations and recent acquisitions. Its debt-to-capital ratio, known as gearing, rose above 20%.
Reporting by Ron Bousso and Shadia Nasralla; Editing by Jason Neely & Simon Cameron-Moore
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