Shell shareholders are continuing to reap the benefits of record profits, as the energy giant extracts substantial rewards from high energy prices.
As it revealed a record $39.9billion (£32.3billion) annual profit on Thursday Shell hiked its dividend by 15 per cent to $0.2875 per ordinary share for the fourth quarter.
This marks the fifth increase since it delivered a more than 60 per cent dividend cut upon the emergence of the pandemic in 2020, and brings total shareholder distributions in the fourth quarter to $6.3billion.
The group also announced a $4billion (£3.2billion) share buyback programme over the next three months, havingbought back $19billion in shares in the year to February 2023 - nearly double the total in 2019.
Boost: Shell shareholders continue to reap the benefits of the group's bolstered bottom line
Shareholders will be able to elect to receive their dividends in US dollars, euros or pounds sterling. The London-listed company's dividend yield is running at about 3.34 per cent.
Shell sharesrose today and were up 2 per cent or 48.00p to2,414.50p this morning, having risen over 24 per cent in the last year.
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The group said: 'Full year income attributable to Shell plc shareholders, compared with the full year 2021, reflected higher realised prices, higher refining margins, and higher trading and optimisation results (mainly related to Integrated Gas, Chemicals and Products and Renewables and Energy Solutions), partly offset by lower volumes, and lower chemicals margins.'
While rival BP has seen its shares dip today, its price is around 25 per cent higher than a year ago.
On the outlook for Shell shareholders, Richard Hunter, head of markets at Interactive Investor, said: 'Shell has once more flexed its financial muscles on a massive scale, while riding the waves of an economic cycle which can bring major challenges as well as rewards.
'The share price may have dipped by 4 per cent over the last three months (by comparison the oil price is down by 3 per cent in the year to date), but the total return for shareholders has been impressive.
'Over the last year, the shares have added over 22 per cent, as compared to a gain of 2.3 per cent for the wider FTSE 100, and the market consensus of the shares as a buy is reflective of Shell’s ongoing position as an important constituent of most portfolios.'
How strong were Shell's numbers?
The group's full-year adjusted earnings reached record levels of nearly $40billion, marking an increase of 107 per cent on a year ago when the company's adjusted earnings came in at $19.3billion. Shell said it enjoyed strong trading from its gas trading arm over the last 12 months.
Today's update also revealed that Shell's fourth quarter figures beat previous forecasts, with adjusted profit coming in at $9.81billion, despite lower gas and oil prices over the period. Analysts had forecast a figure of around £7.97billion.
The integrated gas division performed the most strongly during the quarter, with profits of $5.97billion, followed by the upstream arm with $3.06billion
In charge: Energy giant Shell's new chief executive,Wael Sawan
Cash flow from operating activities for the fourth quarter was $22.4billion, and included working capital inflows of $10.4billion, and tax payments of $4.4billion, the group said.
Shell set aside $1.9billion in its fourth quarter figures in respect of provision for the European Union solidarity contribution and the UK’s Energy Profits Levy, pushing total charges for the year to $2.3billion.
For its current 2023 financial year, Shell said it expects to invest between $23billion and $27billion, while seeking to integrate its oil and gas and LNG arms as part of a broader effort to streamline the business.
The surge in revenue helped Shell sharply reduce its debt to $44.8billion at the end of 2022, from $52.6 billion a year earlier. Its debt-to-capital ratio, known as gearing, dipped to 19 per cent from 23.1 per cent a year earlier.
Wael Sawan, Shell's new chief executive, said: 'Our results in Q4 and across the full year demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.
'We intend to remain disciplined while delivering compelling shareholder returns, as demonstrated by the 15 per cent dividend increase and the four-billion-dollar share buyback programme announced today.'
How have City experts, climate activists and politicians responded?
Michael Hewson, chief market analyst at CMC Markets UK, said: 'Inevitably today’s record profits will draw the usual ire from politicians looking to deflect the blame for the energy policy failures of the last 20 years, by actively encouraging the big oil companies not to invest in new capacity, while failing to plan for what would replace that lost capacity as oil and gas demand increased.'
'Going forward this means that oil and gas prices will continue to remain high, as will profits, until it is acknowledged that the only way to push prices down is to add new capacity in the short term, while transitioning to more sustainable sources of energy in the long term.
'Until this uncomfortable truth is confronted then the controversy over the oil and gas sectors big profits will continue.'
Shifts: A chart showing energy giant Shell's share price over the last 12 months
He added: 'Shell is also under pressure from climate activists who have accused it of greenwashing, by including gas related activities in its renewable’s investment numbers, a charge the company has denied.'
Shell's latest results have provoked some sharp criticisms.
Jonathan Noronha-Gant, a senior campaigner at Global Witness, said: 'People have every right to be outraged at the enormous profits that Shell has made in the midst of an energy affordability crisis that has pushed millions of families into poverty.
'For those facing exorbitant energy bills, and for all of our nurses, firefighters and teachers on the picket line this week, Shell’s profits are an insult. Shell is richer because we’re poorer.'
Sana Yusuf, a climate campaigner at Friends of the Earth, said: 'People can see the injustice of paying eye-watering energy costs while big oil and gas firms rake in billions.
'Fairly taxing their excess profits could help to fund a nationwide programme of insulation and a renewable energy drive, which would lower bills, keep homes warmer and reduce harmful carbon emissions.'
Labour accused Rishi Sunak of being 'too weak' to stand up to oil and gas interests following Shell’s profit increase.
Shadow climate change secretary Ed Miliband said: 'As the British people face an energy price hike of 40 per cent in April, the Government is letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax.'
Liberal Democrat leader Ed Davey said: 'No company should be making these kind of outrageous profits out of Putin’s illegal invasion of Ukraine.
'Rishi Sunak was warned as chancellor and now as Prime Minister that we need a proper windfall tax on companies like Shell and he has failed to take action.'
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