Shell scores forecast-beating income on increased gasoline gross sales

Shell’s profits surpassed market forecasts in the third quarter amid strong demand for liquefied natural gas.

Europe’s biggest oil company reported adjusted earnings of $6billion for the three months ending September, compared to average analyst predictions of $5.4billion.

However, this was still 4 per cent down on the $6.3billion made the previous quarter and around $200million lower on the equivalent period last year.

Better than expected: Shell reported adjusted earnings of $6billion for the three months ending September, compared to average analyst predictions of $5.4billion

The FTSE 100 company’s profits have been squeezed this year by subdued oil prices and refining margins caused by OPEC+ countries boosting output, a slowing Chinese economy, and easing tensions across the Middle East.

Earnings in its chemicals and products arm plunged by 57 per cent from the April to June period to $463million and by $1billion on the third quarter of 2023, while its renewables business more than tripled its year-on-year losses to $162million.

Yet, the London-based group LNG achieved higher liquefaction volumes, primarily due to increased feed gas supply in Nigeria and Trinidad and Tobago.

This helped its total income jump by 22 per cent from over $3.5billion in the second quarter to $4.3billion in the following three months.

It also slashed net debts by over $3billion to $35.2billion, giving it a gearing ratio of 15.7 per cent, despite spending $2.2billion on dividends and $3.5billion on a stock buyback.

Shell has announced a further $3.5billion share repurchase over the following three months and maintained its dividend at 34 cents per share.

The group’s trading update comes two days after BP revealed it exceeded third-quarter forecasts, posting an underlying replacement cost profit of £1.75billion.

However, this was BP’s lowest quarterly profit since 2020, when harsh Covid-related travel restrictions sent oil demand slumping.

Under chief executive Murray Auchincloss, the company is prioritising fossil fuels output and cutting back its investment in renewables amid elevated pressure from shareholders to bolster returns.

It has suspended all new offshore wind schemes and signed a memorandum of understanding with the Iraqi Government to develop the Kirkuk oilfield.

Mark Crouch, market analyst at eToro, believes BP’s recent performance has ‘more to do with the wishy-washy direction the company is heading.’

‘It’s Shell’s commitment to hydrocarbons that is setting the oil giant apart from its rival. And despite facing criticism, these earnings seem to vindicate Shell for sticking to their guns.’

In March, Shell scrapped a target to reduce the net carbon intensity of its energy products by 45 per cent by 2035, blaming ‘uncertainty in the pace of change in the energy transition.’

Its spending on renewable energy totalled $409million in the third quarter, equal to just 8 per cent of its overall capital expenditure.

Shell shares were 1 per cent up at 2,514.5p on Thursday morning, although they have fallen by approximately 12 per cent over the past six months.