Shell Profits Fall After Chemicals, Refining Take Hit, Still Beats Forecasts -- Update

By Neanda Salvaterra

LONDON -- Royal Dutch Shell PLC's first-quarter earnings fell but the performance of its gas trading business helped the company fare better than many of its rivals.

The world's largest energy firms have taken a hit in the first-quarter amid geopolitical turmoil and global oil prices that are weaker compared with a year ago. Exxon said its earnings during the period fell in all of its global business segments, while BP PLC saw it its profit drop by 12% in the first quarter.

Shell on Thursday said on a current cost-of-supplies basis -- a number similar to the net income that U.S. oil companies report -- its first-quarter profit fell almost 7% to $5.2 billion, compared with $5.7 billion in the same quarter a year ago when it posted its highest quarterly profit since 2013.

Shell's shares were up 2.37% in early afternoon trading in Europe.

Revenue in the period fell 6.2% to $83.74 billion, Shell said. Cash flow from operations fell to $ 8.63 billion, from $9.47 billion in the first quarter of 2018.

Shell said lower returns from its chemicals and refining operations hurt its earnings. Even so, the Anglo-Dutch giant fared a bit better than its European and North American peers, partly because its gas trading business provided a boost. The firm also benefited from higher prices for LNG and gas, analysts said.

Although Shell's total gas production fell by 12% due to divestments, the firm's performance was strong across several market segments and its integrated gas earnings beat market expectations, according to analysts.

The results were "very reassuring both on profit and cash flow," said Lucas Herrmann, an analyst at Deutsche Bank AG.

Shell also said it would be able to sustain the $25 billion share buyback program it launched last year and will purchase another $2.75 billion worth of shares in the next tranche, up from $2.5 billion previously.

"It was a standout result out of the Big Five," said Thomas Adolff, the head of European oil and gas equity research at Credit Suisse.

Write to Neanda Salvaterra at neanda.salvaterra@wsj.com

(END) Dow Jones Newswires

May 02, 2019 09:08 ET (13:08 GMT)

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