Royal Dutch Shell raised its dividend despite an 87 percent drop in earnings as the coronavirus pandemic hit energy prices, reduced production and weakened refining margins. For the three months to December 31, the Anglo-Dutch oil major’s net income adjusted for cost of supply — Shell’s preferred profit measure and one tracked most closely by analysts — dropped to $393m.
This compared with $2.9bn in the same period a year ago and was short of analysts estimates of $597m. For the full year, Shell reported a 71 percent drop in profits to $4.8bn, versus $16.5bn in 2019. This is the lowest at least since the unification of Royal Dutch and Shell Transport into one parent company in 2005.
On a headline basis, Shell reported a $21.7bn annual loss, its first-ever.
The coronavirus crisis and the resulting collapse in oil demand and prices have wreaked havoc on the balance sheets of major companies, just as European players are seeking to generate more cash to plough into lower carbon energies and technologies.
Shell said it would increase the dividend 4 percent to 17-35 cents a share in the first quarter of 2021.
In April last year Shell made the first cut to its payout since the second world war, slashing the dividend by 66 percent to 16 cents.
In October, Shell raised its dividend to 16.65 cents which it maintained in the fourth quarter as it sought to woo back investors after a dramatic fall in the company’s share price to a multi-decade low amid broader oil market malaise.
The company has said its strong cash flows and performance gave it confidence to resume paying a higher dividend as part of a “new era” of annual growth.