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Investing.com -- Shell (BS:SHELl) on Thursday reported a sharp decline in fourth-quarter profits, with adjusted earnings falling to $3.66 billion, a 39% drop from the previous year.
The energy giant cited lower oil and gas prices, weaker refining margins, and reduced trading profits as key factors behind the earnings slump.
Despite the weaker results, Shell announced a $3.5 billion share buyback plan, underscoring its commitment to returning capital to shareholders.
The decline in earnings was stark compared to the third quarter when Shell posted $6.03 billion in adjusted earnings.
The company’s full-year profit also fell, reaching $23.7 billion, down from $28.25 billion in 2023, reflecting a softer energy market.
Lower margins from crude and oil product trading, reduced LNG trading profits, and lower marketing volumes contributed to the weaker results.
Operating cash flow in the quarter stood at $13.2 billion, supported by working capital inflows of $2.4 billion.
However, this was offset by tax payments and regulatory costs related to emission certificates and biofuel programs.
Meanwhile, Shell’s net debt rose to $38.8 billion from $35.2 billion in the previous quarter, driven by share buybacks, dividend payments, and lease additions.
Despite the lower profits, Shell maintained its shareholder distributions. The company completed a $3.5 billion buyback program announced in the previous quarter and initiated a fresh round of repurchases of the same amount, expected to be completed by the first quarter of 2025. Cash dividends for the quarter stood at $0.358 per share.
For 2024, Shell will focus on disciplined spending, with $21 billion in capital expenditures. They indicated potential spending reductions for 2025, with more details to come at their Capital Markets Day.