Shell Q1: Earnings Power Shines Despite Revenue Headwinds

Zinger Key Points
  • Shell's Q1 Integrated Gas production rose 10% Q/Q, reaching 992 kboe/d, while Upstream remained steady at 1,872 kboe/d.
  • Shell announced a share buyback program worth $3.5 billion.

Shell plc SHEL shares are trading higher after its first-quarter FY24 results.

Revenue of $72.48 billion missed the consensus of $82.04 billion. Total production at Integrated Gas rose 10% Q/Q to 992 kboe/d, and Upstream remained flat on quarter at 1,872 kboe/d. 

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Meanwhile, sales volumes at Marketing fell to 2,763 thousand b/d from 2,997 thousand b/d the previous quarter, and Refinery processing intake at Chemical & Products rose 9% Q/Q to 1,430 Refinery kb/d.

Adjusted earnings increased 6% Q/Q to $7.73 billion and Adj. EBITDA rose 15% Q/Q to $18.71 billion, reflecting lower operating expenses, higher margins from crude and oil products trading and optimisation, and growth in refining margins.

Net income attributable to Shell plc shareholders declined to $7.36 billion from $8.71 billion a year ago. Adjusted earnings per ADS for the quarter was $2.40, above the consensus of $1.86.

Cash flow from operating activities stood at $13.3 billion in the quarter. At the end of the first quarter, net debt was $40.5 billion, with a gearing ratio of 17.7%. 

Dividend Boost: Shell disclosed a first-quarter dividend per share of $0.344, payable on June 24 to shareholders of record as of May 17.

Buyback: The company announced a share buyback program worth $3.5 billion for a contract term of around three months.

In the first quarter, total shareholder distributions stood at $5.0 billion, comprising share repurchases of $2.8 billion and cash dividends of $2.2 billion.

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FY24 Outlook Reiterated: The company expects cash capital expenditure of $22 billion – $25 billion.

It expects second-quarter production at Integrated Gas of approximately 920 – 980 thousand boe/d and Upstream of about 1,630 – 1,830 thousand boe/d.

The company projects Marketing sales volumes of approximately 2,700 – 3,200 thousand b/d

Shell stock has gained more than 22% in the last 12 months. Investors can gain exposure to the stock via Direxion Hydrogen ETF HJEN and VanEck Natural Resources ETF HAP.

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Price Action: SHEL shares are up 2.34% Y/Y at $72.61 at the last check Thursday.

Photo via Wikimedia Commons

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