Oil giant Shell raises dividend despite full-year profit miss

British oil giant Shell on Thursday reported a significant drop in annual profit, citing higher exploration write-offs, lower trading margins and weaker crude prices over the final three months of the year.

Shell posted adjusted earnings of $23.72 billion for the full-year 2024, compared to annual profit of $28.25 billion a year earlier.

Analysts had expected Shell’s full-year 2024 net profit to come in at $24.71 billion, according to an LSEG-compiled consensus. A separate forecast from analysts polled by Vara Research expected full-year profit to come in at $24.11 billion.

The energy major posted weaker-than-anticipated adjusted earnings of $3.66 billion for the final quarter of 2024.

Shell announced a 4% increase in dividend per share and launched another share buyback program of $3.5 billion, which is expected to be completed over the next three months.

Speaking to CNBC’s “Squawk Box Europe” on Thursday, Shell CEO Wael Sawan described 2024 as a “very strong year,” one which gave the company a platform “to do everything we said we were going to do.”  

Asked whether it was time for Shell to move its listing from London to New York to close the valuation gap on its U.S. peers, Sawan said the firm was “always reviewing headquarter listings and the like.”

However, “there is no live discussion at the moment on this in Shell because our number one priority is to make sure that we unlock the full potential of this company,” Sawan noted.

Shares of the London-listed company traded 1.2% higher at 10:30 a.m. London time.

Other earnings highlights:

• Full-year cash flow from operating activities came in at $54.68 billion, beating analyst expectations
• Net debt at the end of 2024 was $4.7 billion lower than at the beginning of the year

The world’s top oil and gas companies have seen profits fall from record levels in 2022, when Russia’s full-scale invasion of Ukraine prompted international benchmark Brent crude to jump to nearly $140 a barrel.

Oil prices have since cooled amid faltering global demand, with Brent crude futures averaging $80 a barrel in 2024. That was about $2 a barrel less than the previous year, according to the U.S. Energy Information Administration.

In a trading update on Jan. 8, Shell trimmed its liquefied natural gas (LNG) production outlook for the final three months of 2024 and warned that trading results for its chemicals and oil products division were expected to be “significantly lower” on a quarterly basis.

Shell’s full-year results come as the company enters the final stretch of its so-called “first sprint.” The strategy, which was launched in 2023 and runs to the end of this year, aims to close the valuation gap with U.S. peers by boosting the major’s profitability.

Shell CEO Wael Sawan has prioritized the firm’s more profitable oil and gas operations as part of this shift, while cutting spending on areas such as offshore wind and hydrogen and withdrawing from power markets in Europe and China.

Like other oil and gas majors, Shell has watered down climate targets and green investments in recent years. The company, however, has said it remains committed to becoming a net-zero energy business by 2050.

Analysts led by Biraj Borkhataria at RBC Capital Markets said Shell’s results confirmed “relatively soft” expectations but showed robust cash generation.

“Given expectations had fallen following the trading update, we see these results as largely uneventful,” Borkhataria said in a research note.

Separately, Maurizio Carulli, an energy analyst at Quilter Cheviot, said Shell’s fourth-quarter results painted a “mixed picture.”

“While earnings fell below expectations, the company’s cash flow performance exceeded consensus estimates,” Carulli said.

“Seasonal factors, alongside lower prices and margins, impacted earnings negatively. However, these concerns are mitigated by Shell’s robust cash flow generation,” he added.

U.S oil giants Exxon Mobil and Chevron are both scheduled to report earnings on Friday, while European peers TotalEnergies and BP are set to follow suit on Feb. 5 and Feb. 11, respectively.

Hours after the results release, a Scottish court overturned Britain’s approvals for two substantial North Sea oil and gas fields.

The ruling, which was seen as a major victory for environmental groups, said consent for the Rosebank and Jackdaw projects was granted unlawfully as the previous U.K. government had not considered the carbon emissions created by burning any of the fossil fuels produced. It noted that “no oil or gas may be extracted from the Jackdaw or Rosebank field” until the government retakes the decisions.

“This is a significant win which means that Rosebank cannot go ahead without accounting for its enormous climate harm,” Tessa Khan, executive director of Uplift, said in a statement. Uplift brought the case alongside environmental campaign group Greenpeace.

Shell and Norway’s Equinor, which both fought to uphold approval of the contested projects, said they welcomed the decision and were pleased that work can continue while new consents are sought.

Shell noted it has spent more than £800 million ($995.5 million) since the regulator first approved the smaller Jackdaw gas field in 2022 and called for “swift action” from the government to resolve the situation.