Shell profits drop nearly one-third on lower prices, but still beat expectations
Shell’s second-quarter net profit fell sharply—down nearly 32%—due to lower oil prices, weaker gas trading, and chemical plant outages. However, the $4.26 billion result still beat analyst expectations of $3.74 billion, according to a company poll.
Despite the drop in earnings, Shell will maintain its $3.5 billion share buyback program for the next three months, continuing a streak of 15 consecutive quarters with buybacks of at least $3 billion. Shares rose around 2% in morning trading, outperforming the broader European energy index, News.Az reports, citing Reuters.
Chief Financial Officer Sinead Gorman acknowledged a challenging macroeconomic and geopolitical environment. “We saw that knock-on impact on both physical trade flows as well as commodity prices and margins. Despite that, we delivered a robust set of results,” she said.
Shell cut $3.9 billion in costs compared to 2022, with a broader target of saving $5–7 billion by 2028. Operating cash flow for the quarter reached $11.9 billion, down from $13.5 billion a year ago. Combined with $2.1 billion in dividends, Shell returned 46% of its operating cash flow to shareholders over the past year—within its target range of 40–50%.
The company’s marketing unit benefited from higher fuel margins during the summer driving season, helping to offset losses from its U.S. Monaca chemicals plant outage and sluggish demand in the chemicals sector. Shell is now seeking new partners or buyers for parts of its chemicals business.
CEO Wael Sawan reaffirmed Shell’s commitment to maintaining its lead in global LNG trading, while the company took a more cautious approach to oil trading in the quarter. Gorman noted that oil market volatility had become detached from supply-demand fundamentals, prompting Shell to scale back its trading activity.
Meanwhile, rival BP reported strong oil trading results ahead of its earnings release scheduled for August 5.
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