Royal Dutch Shell (RDSA) has remained cautious on shareholder payouts after a mixed bag of results for the three months to 30 September. The supermajor saw its preferred profit metric of adjusted net income on a current cost of supplies basis fall 15 per cent year on year to $4.8bn (£3.7bn), but this beat analyst expectations by 22 per cent.
The integrated gas division was the standout performer in the quarter, beating expectations by 29 per cent on adjusted net income, bringing in $2.7bn. Overall free cash flow was also up 26 per cent on last year to $10.1bn.
Despite a handful of positive signs in a tough environment, Shell’s share price fell by 4 per cent on the release of its third-quarter update. On top of its profits falling, the company left its quarterly dividend flat at 47¢.
There will be further payouts as part of the $25bn-by-2021 buyback programme, however, with $2.8bn further to be spent up to and including January. Chief executive Ben van Beurden said the $25bn goal was firm despite “weak macroeconomic conditions”.
The state of the global economy hasn't softened Shell's ambitions towards reducing its net debt, either. Net debt at the end of September was $75bn, leaving gearing flat quarter on quarter, but below the 25 per cent goal, at 27.9 per cent. A year ago it was 23.1 per cent. Jefferies analyst Jason Gammel said the caution from Mr van Beurden was warranted due to “weak margins in the downstream [division] and economic/trade uncertainty”.
Another positive for the balance sheet is earnings per share (EPS), which fell to a two-year low in the second-quarter (Q2) numbers. Now, Shell has doubled EPS to 73¢ compared with Q2.
