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Americas hit Shell's earnings

RESULTS: Full-year figures for Royal Dutch Shell fell short of analysts' expectations, but shareholders are in line for a 4.7 per cent hike in the dividend for the first quarter of 2013.
February 1, 2013

A disappointing contribution from its upstream assets in the Americas resulted in Royal Dutch Shell (RDSB) delivering full-year and fourth-quarter profits that fell short of analysts' expectations. However, shareholders can take solace from a proposed 4.7 per cent hike in the dividend for the first quarter of 2013, together with the fact that the Anglo-Dutch group has made significant progress in its expansion plans within the Asia Pacific region.

IC TIP: Buy at 2331p

Excluding one-off gains of $1.7bn (£1.08bn), Shell’s fourth quarter net profits - on a constant cost of supplies (CCS) basis - came in at $5.6bn, a 15 per cent rise on the previous year, but well below the $6.3bn consensus forecast. However, these profits were subject to an estimated $400-450m in exceptional upstream costs that are unlikely to be repeated. The successful ramp-up of Pearl GTL in Qatar, and a strong performance from its upstream LNG businesses enabled Shell to post a 2 per cent rise in full-year adjusted CCS profits to $25.1bn, although that figure was held in check by a combination of lower gas realisations and higher operating costs that hampered the group's performance in the Americas. Shell’s adjusted operating cash flow for the full-year was marginally down on 2011, although cash generation picked up during the fourth quarter, rising 24 per cent on the comparable period to $8.9bn.

Shell's capital expenditure ramped up during the fourth quarter and amounted to $36.8bn for the full year - 23 per cent up on the initial estimate. It's clear that the group remains focused on its expansion plans, but an adjusted Reserves Replacement Ratio (RRR) of 85 per cent would have disappointed industry analysts. Nevertheless, the surge in fourth-quarter spending should help to improve matters. In Australia, Shell completed the acquisition of Chevron’s stakes in the East & West Browse fields, and the group expanded its North Sea interests through the acquisition of 75 per cent of Hess Corp's interests in the Beryl area fields.

Prior to these figures Investec anticipated 2013 adjusted EPS of 414.5¢ (2012: 402¢)

ROYAL DUTCH SHELL (RDSB)
ORD PRICE:2,331pMARKET VALUE:£147bn*
TOUCH:2,330-2,332p12-MONTH HIGH:2,379pLOW: 2,020p
DIVIDEND YIELD:4.7%PE RATIO:9
NET ASSET VALUE:2,950¢*NET DEBT:9%

Year to 31 DecTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)
200845826.5427160
200927812.7204168
201036835.3328168
201147055.7498168
201246750.3425172
% change-1-10-15+2

Ex-div: 13 February

Payment: 28 March

*Reflects both 'A' and 'B' shares. £1 = $1.58