Shell 2022 profit more than doubles to record $40 billion
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[February 02, 2023] By
Ron Bousso and Shadia Nasralla
LONDON (Reuters) - Shell delivered a record $40 billion profit in 2022,
the energy giant said on Thursday, capping a tumultuous year in which a
surge in energy prices after Russia's invasion of Ukraine allowed it to
hand shareholders unprecedented returns.
The British company's record earnings, which more than doubled from a
year earlier, mirror those reported by U.S. rivals earlier this week and
are certain to intensify pressure on governments to further raise taxes
on the sector.
"We intend to remain disciplined while delivering compelling shareholder
returns," Chief Executive Wael Sawan said in a statement on the first
set of earnings since he took the helm on Jan. 1.
Shell also posted record fourth-quarter profit of $9.8 billion on the
back of a strong recovery in earnings from liquefied natural gas (LNG)
trading, beating analyst forecasts for an $8 billion profit.
The annual profit of $39.9 billion far exceeded the previous record of
$31 billion in 2008. It was driven by higher oil and gas prices, robust
refining margins and a strong trading.
Shell shares were up 3% by 1050 GMT, compared with a small gain in the
broader European energy index.
Earnings from its LNG division reached $6 billion, a record high,
boosted by strong overall trading earnings on the back the gas price
volatility, despite recording a loss in the third quarter and a sharp
drop in liquefaction volumes due to outages at LNG facilities.
Governments struggling with soaring energy bills have responded by
imposing windfall taxes on the energy sector, but Britain's Labour
opposition party said Prime Minister Rishi Sunak was not doing enough.
"The government is letting the fossil fuel companies making bumper
profits off the hook with their refusal to implement a proper windfall
tax," Labour's climate policy spokesperson Ed Miliband said in a
statement.
Shell said it expects to incur around $2.4 billion in accounting costs
related to the windfall levies in 2022, and that it will pay $500
million in cash tax in Britain this year.
BUYBACKS CONTINUE
Sawan, who earlier this week announced changes to Shell's structure,
sought to convey a sense of continuation of his predecessor Ben van
Beurden's strategy.
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Energy company Shell's logo is pictured
seen during a launch event for a hydrogen electrolysis plant at its
Rhineland refinery in Wesseling near Cologne, Germany, July 2, 2021.
REUTERS/Thilo Schmuelgen
"The company is in very good health. We have absolutely the right
strategy and my core focus over the coming decade is to make sure
that I can support the company as we operationalize strategy," Sawan
told reporters.
Shell will update investors on its strategy in June.
As previously announced, Shell boosted its dividend by 15% in the
fourth quarter, the fifth increase since it delivered a more than
60% cut in the wake of the 2020 COVID-19 pandemic.
The company also announced a new $4 billion share buyback programme
over the next three months, unchanged from the previous three. It
bought back $19 billion in shares in the year to February 2023,
nearly double the total in pre-pandemic 2019.
The profits helped Shell and many other Western energy companies
mask huge writedowns they took on Russian assets they abruptly
exited after the conflict broke out.
Shell however said on Thursday that it continued to export some LNG
from Russia.
Shell aims to build a large renewables and low-carbon energy
business as part of its ambition to sharply reduce greenhouse gas
emissions in the coming decades.
The company invested around $3.5 billion in its renewables and
energy solutions business in 2022, around 14% of its capital
expenditure of $24.8 billion. Capital expenditure in 2023 will reach
$23 billion to $27 billion.
"Shell can't claim to be in transition as long as investments in
fossil fuels dwarf investments in renewables," said Mark van Baal,
founder of activist shareholder group Follow This.
The surge in revenue helped Shell sharply reduce its debt to $44.8
billion at the end of 2022 from $52.6 billion a year earlier. Its
debt-to-capital ratio, known as gearing, dipped to 19% from 23.1% a
year earlier.
(Reporting by Ron Bousso and Shadia Nasralla; Editing by David
Goodman and Jan Harvey)
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