Shell Posts Loss but Eyes Recovery This Year
February 04 2021 - 7:02AM
Dow Jones News
By Sarah McFarlane
LONDON -- Royal Dutch Shell PLC reported a fourth-quarter loss
as it continued to grapple with the fallout of the pandemic but
said it would raise its dividend, forecasting a recovery in demand
later this year.
International oil companies are reporting one of their worst
annual performances in decades after Covid-19 sapped demand for
oil, hitting prices. In response, energy companies have slashed
spending, cut jobs and written down the value of their assets.
Shell on Thursday reported a fourth-quarter loss on a net
current-cost-of-supplies basis -- a figure similar to the net
income that U.S. oil companies report -- of $4.5 billion, down from
a profit of $871 million in the same period the previous year.
For the full year Shell reported a loss of $19.9 billion, from a
profit of $15.3 billion in 2019. Shell's peers including Exxon
Mobil Corp., Chevron Corp. and BP PLC also reported losses for
2020.
Shell said its profit was hit by a fall in oil and gas
production and weak refining margins, as well as already flagged
asset write-downs and charges related to onerous contracts.
Overall, Shell's full-year posttax write-downs totaled $21.3
billion, partly reflecting lower energy prices. That is part of a
broader revision of asset values across the industry, triggered by
the pandemic, which has been the steepest in at least a decade.
Shell said that while it was still feeling the impact of the
pandemic with weaker energy demand, it had seen some signs of
recovery in the fourth quarter and was optimistic about a continued
rebound.
"I am optimistic that in the second half of the year we see a
much more fulsome recovery," said Chief Executive Ben van Beurden.
Oil demand is around 5% to 7% below the levels of 2019, but should
return to those levels in 2022, as the aviation sector in
particular recovers, he added.
Shell said it would raise its first-quarter dividend by 4%, in
line with the commitment made to shareholders last year of annual
increases, after cutting it in April for the first time since World
War II by two-thirds.
"We are coming out of 2020 with a stronger balance sheet, ready
to accelerate our strategy and make the future of energy," said Mr.
van Beurden.
The company has said it would give an update next Thursday on
its continuing restructuring and broader strategy to accelerate
investments in low-carbon energy.
Rivals Total SE and BP have already laid out targets to increase
renewable power generation, while reducing their dependence on
fossil fuels.
The pivot to renewable energy comes as Shell and others in the
industry are also seeking to reduce debt. Shell wants to cut its
debt to $65 billion from $75.4 billion at the end of the fourth
quarter. That is down from $79 billion a year ago after a number of
asset sales.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
February 04, 2021 06:47 ET (11:47 GMT)
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