Despite lower annual income for 2023 compared to its record-high profit of 2022, Shell (NYSE: SHEL) raised on Thursday its quarterly dividend and announced a new share buyback after beating consensus estimates for the fourth quarter and full year.
The UK-based supermajor reported today adjusted earnings of $7.3 billion for the fourth quarter, well ahead of estimates of $6.4 billion, thanks to strong LNG trading and optimization results. Even the chemicals and products segment, for which Shell had anticipated a loss for Q4, posted a surprise profit.
Full-year 2023 earnings stood at $28.25 billion, also beating a consensus forecast of $27.5 billion compiled by LSEG.
Last year's earnings were 29% lower compared to the highest-ever earnings in Shell's 116-year history-$39.9 billion for 2022. Profits last year were hit by falling oil prices compared to the much higher average price of oil in 2022.
Still, the 2023 earnings came in better than expected, pushing Shell's shares 3% higher early on Thursday morning in London trade.
Last year, Shell returned $23 billion to shareholders, which was more than 40% of the supermajor's cash flow from operations (CFFO) for 2023.
The company expects to continue focusing on disciplined spending, which saw 2023 cash capex at $24.4 billion. The outlook for the 2024 cash capex is between $22 billion and $25 billion.
"In line with our progressive dividend policy, Shell is now increasing its dividend by 4%. We are also commencing a $3.5 billion buyback programme for the next three months," chief executive officer Wael Sawan said in a statement.
The share repurchase program is expected to be completed by the Q1 2024 results announcement in the spring.
The profit beat for Q4 and full-year 2023 helped Shell's shares rise to a three-week high on Thursday, "putting further distance between itself and its sector peer BP," Michael Hewson, chief market analyst at CMC Markets said, commenting on Shell's earnings.
"The improvements here across the board would appear to justify the pivot we saw last summer from CEO Wael Sawan where he pledged to focus on returns and "invest in the models that work" and "those with the highest returns," Hewson added.
By Tsvetana Paraskova for Oilprice.com
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