Shell Q1 2025 slides: Adjusted earnings surge 51% as buyback streak continues

Introduction & Market Context

Shell plc (NYSE:SHEL) released its first quarter 2025 results on May 2, highlighting solid performance across its business segments despite mixed market conditions. The energy giant reported a substantial improvement in adjusted earnings compared to the previous quarter, while maintaining its commitment to shareholder returns and strategic portfolio optimization.

The results come as Shell continues to navigate the energy transition, balancing investments in traditional oil and gas operations with targeted initiatives in lower-carbon energy solutions. With Brent crude prices averaging around $76 per barrel during Q1 2025, down from previous quarters, Shell’s ability to deliver improved earnings demonstrates the resilience of its diversified business model.

As shown in the company’s key messages slide, Shell achieved solid financial results while maintaining its disciplined approach to capital allocation:

Quarterly Performance Highlights

Shell reported adjusted earnings of $5.6 billion for Q1 2025, representing a significant 51% increase from the $3.7 billion reported in Q4 2024. Income attributable to shareholders rose dramatically to $4.8 billion, compared to just $0.9 billion in the previous quarter. Adjusted EBITDA also improved to $15.3 billion from $14.3 billion in Q4 2024.

However, cash flow from operations decreased to $9.3 billion from $13.2 billion in the previous quarter, while free cash flow declined to $5.3 billion from $8.7 billion. Cash capital expenditure was notably lower at $4.2 billion compared to $6.9 billion in Q4 2024. The company’s net debt increased slightly to $41.5 billion from $38.8 billion at the end of 2024.

The following slide provides a comprehensive overview of Shell’s Q1 2025 financial performance compared to the previous quarter:

Shell’s performance across business segments showed improvement in most areas. Integrated Gas and Upstream segments continued to be the main profit drivers, while Chemicals & Products returned to profitability after posting a loss in the previous quarter. The Renewables & Energy Solutions segment also improved, reaching breakeven after a loss in Q4 2024.

The detailed breakdown of segment performance is illustrated in this slide:

Detailed Financial Analysis

The improvement in Shell’s adjusted earnings from Q4 2024 to Q1 2025 was driven by several factors. According to the company’s analysis, DSR (Downstream & Renewables) prices and margins contributed $0.8 billion to the increase, while IGU (Integrated Gas & Upstream) prices and margins added $0.1 billion. These positive factors were partially offset by a negative impact of $0.4 billion from volume and mix changes. Other factors contributed an additional $1.4 billion to the earnings improvement.

Shell’s cash conversion remains strong, with the company generating $9.3 billion in cash flow from operations starting from $5.6 billion in adjusted earnings. This conversion was supported by $5.2 billion in depreciation, depletion, amortization, and well write-offs, partially offset by tax payments and other adjustments.

The company’s balance sheet remains resilient, with gearing at approximately 19%. Shell’s financial strategy is designed to support dividend payments at oil prices as low as $40 per barrel, with share buybacks continuing at around $50 per barrel, as illustrated in the following slide:

Strategic Initiatives

During Q1 2025, Shell completed several strategic portfolio actions aligned with its long-term strategy. These included the completion of the SPDC (Nigeria) sale, exiting onshore oil production in the Niger Delta, and the acquisition of Pavilion, a global LNG trading business. The company also approved the final investment decision for the Gato do Mato deep-water project in Brazil and completed the sale of its Singapore Chemicals & Products business as part of its portfolio high-grading efforts.

These strategic moves are visually represented in the following slide:

Shell’s capital allocation strategy remains focused on balancing shareholder returns with disciplined investments and maintaining a strong balance sheet. The company is targeting total shareholder distributions of 40-50% of CFFO through the cycle, with a continued emphasis on share buybacks. Shell has now maintained buybacks of at least $3 billion for 14 consecutive quarters, demonstrating its commitment to returning value to shareholders.

For 2025-2028, Shell is targeting cash capital expenditure of $20-22 billion annually, with approximately $12-14 billion allocated to Integrated Gas and Upstream segments and around $8 billion to Downstream and Renewables & Energy Solutions. The company aims to achieve a return on average capital employed (ROACE) of at least 10% across all segments.

The detailed capital allocation strategy is outlined in this slide:

Forward-Looking Statements

Looking ahead, Shell remains committed to its strategy of "profitably transitioning towards net zero" while delivering competitive returns to shareholders. The company is targeting normalized free cash flow per share growth of more than 10% annually through 2030, supported by structural cost reductions of $5-7 billion by the end of 2028.

Shell’s environmental targets include halving Scope 1 and 2 emissions under operational control by 2030, achieving near-zero methane emissions intensity by 2030, and reducing the net carbon intensity of its products by 15-20% by 2030. The company also aims to reduce customer emissions from the use of its oil products by 15-20% by 2030.

These forward-looking objectives are summarized in the following slide:

Shell’s investment case through the energy transition emphasizes growth and resilience, value creation through performance and discipline, and competitive shareholder returns. The company is positioning itself to navigate the evolving energy landscape by maintaining its strengths in traditional oil and gas while selectively investing in lower-carbon opportunities.

As illustrated in this comprehensive overview of Shell’s investment case:

Shell’s Q1 2025 results demonstrate the company’s ability to deliver improved earnings despite challenging market conditions. With a consistent focus on shareholder returns, disciplined capital allocation, and strategic portfolio optimization, Shell continues to balance short-term performance with long-term positioning for the energy transition. Investors will be watching closely to see if the company can maintain this momentum through the remainder of 2025 while progressing toward its ambitious financial and environmental targets.

Full presentation:

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