Shell profits fall 19% in second quarter

LondonShell posted second-quarter profit of $6.3 billion, down 19 percent from the previous three months as refining margins and oil and gas trading weakened, but still beat analysts’ forecasts.

However, results were up nearly 25 percent from a year earlier, indicating that Chief Executive Wael Sawan’s drive to cut costs and improve results is working.

The British company also announced it would buy back another $3.5 billion in stock over the next three months, at a similar pace to the previous quarter. It kept its dividend unchanged at 34 cents per share.

On Tuesday, BP raised its dividend by 10 percent after announcing forecast-beating profits of $2.8 billion. Last week, France’s TotalEnergies reported a 6 percent drop in second-quarter profit, hurt by weaker refining margins.

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Under Sawan, who took office in January 2023, Shell has scaled back renewables and hydrogen operations, pulled out of European and Chinese energy markets and sold refineries to focus on higher-margin businesses, mainly in oil and gas.

Shell said it achieved cost reductions of $700 million in the first half of 2024, bringing the total of such cuts from 2022 to $1.7 billion, as part of a savings target of between $2 billion and $3 billion by 2025.

“Today’s results demonstrate continued strong operating performance,” said RBC Capital Markets analyst Biraj Borkhataria.

Weaker intermediation

Shell’s second-quarter adjusted profit, its definition of net profit, beat analysts’ expectations of $6 billion. It rose from $5.1 billion a year earlier but was lower than the $7.7 billion profit Shell posted in the first quarter.

The quarterly decline reflected lower prices and sales volumes, as well as weaker trading in Shell’s flagship liquefied natural gas division, reflecting seasonally lower demand.

LNG volumes were also lower due to plant maintenance. Lower refining margins and weak oil trading also weighed on results, which were, however, offset by better-than-expected profits in the oil and gas production and marketing divisions.

Shell suffered a $708 million impairment after selling its Singapore refinery. It also suffered a $783 million impairment after halting construction of one of Europe’s largest biofuel plants a year before it was due to go live, citing weak market conditions.