Shell Reports 16% Drop in Profit for 2024

By Arunima Kumar

(Reuters) – Shell reported a 16% drop in profit for 2024 on Thursday amid weakness in oil and gas prices and demand, but shares rose after raising its dividend by 4% and extending its share buyback programme.

The oil major also announced a $3.5 billion buyback for the current quarter, marking the 13th consecutive quarter of at least $3 billion in share repurchases.

Shares climbed over 2%, despite the company reporting its 2024 adjusted earnings, its definition of net profit, falling to $23.72 billion from $28.25 billion in 2023. This decrease was impacted by narrower liquefied natural gas (LNG) trading margins, lower oil and gas prices, and weaker refining margins.

The earnings fell short of a $24.64 billion consensus compiled by LSEG and a $24.11 billion forecast from analysts at Vara Research.

As the first major energy company to release results, Shell stated that fourth-quarter earnings nearly halved from the previous year to $3.66 billion, also missing analysts’ expectations.

RBC Capital Markets analyst Biraj Borkhataria noted, “As expected, Shell reported 4Q results this morning which showed relatively soft earnings, but continued strong cash generation,” emphasizing the group’s consistent cash return to shareholders.

In his remarks, CEO Wael Sawan mentioned that the share buybacks were “underpinned by the significant progress that we are making as an organisation.”

Sawan has focused on cutting costs and shifting the company back to its most profitable sectors—oil, gas, and biofuels—while moving away from renewable power.

“We achieved a (cost) reduction of $3.1 billion by the end of 2024, one year ahead of our end-2025 target date and above the $2 to $3 billion range set in 2023,” he stated.

Shell’s fourth-quarter earnings included $2.2 billion in impairments, including a $1 billion write-off for a U.S. offshore wind project. CFO Sinead Gorman explained that the project did not align with the company’s capabilities or return goals, and Shell is looking to monetize it.

Leading oil and gas companies have seen a decline in profits through 2024, following record earnings in the previous two years, as energy prices stabilized and oil demand weakened.

Shell also expects its 2025 capital expenditures to drop below last year’s $21 billion range, with more details to be announced at its capital markets day in March.

The refining operations reported an adjusted loss of $229 million in the chemicals and products unit, compared to a $29 million profit last year due to weakened global refining margins amid decreased economic activity and new refineries opening in Asia and Africa.

Executives stated on an analyst call that Shell had no plans to exit refining altogether, but it is not looking to expand there either. The company is attempting to sell its stake in a German refinery and plans to close a plant in Wesseling, Germany, after selling its Singapore refining and chemicals hub last year.

During the fourth quarter, Shell operated its refineries at 76% capacity, expecting to increase this to 80-88% in the first quarter.

Shell also noted there is no timeline for arbitration over LNG supply from Venture Global’s Calcasieu Pass facility, which began generating proceeds in 2022 but faced delays in commercial operations resulting in disputes with customers, including BP, Shell, and Italy’s Edison, over missed cargoes.