LONDON: Shell's first-quarter profit beat estimates and hit its highest in two years at $6.9 billion on Thursday, boosted by gains linked to the Middle East war, leading the company to raise the dividend by 5%.
At the same time, it slowed its quarterly share buyback programme to $3 billion from $3.5 billion to help divert cash to its balance sheet as a short-term liquidity squeeze after war-related energy supply disruption increased its debt.
"It really reflects that confidence we have in the long-term cash flows of the company," Shell's Chief Financial Officer Sinead Gorman said on a call with reporters of the dividend hike. She added she still felt Shell shares were undervalued.
Turning to the buybacks, she said she had reduced them to allocate cash to the balance sheet.
OIL TRADING BONANZA, ECHOING OTHER EUROPEAN MAJORS
Shell's shares were down 2.2% in early trading, broadly in line with other oil majors' shares as benchmark global oil prices have retreated from peaks well above $100 a barrel. .
First-quarter adjusted earnings, Shell's definition of net profit, rose to $6.92 billion, beating an analyst consensus of $6.36 billion in a company-provided poll and up from $5.58 billion a year earlier.
Profits at its chemicals and products unit, which includes refining and its oil trading desk, were $1.93 billion, beating expectations of $1.24 billion and up from $0.45 billion last year.
This echoes big oil trading profits at its European peers BP and TotalEnergies that also take speculative bets on moving prices in contrast with their more cautious U.S. rivals.
Shell's oil and gas output fell 4% compared with the previous quarter, mainly due to outages in Qatar where part of its Pearl gas-to-liquids plant was damaged in the Middle Eastern conflict that began at the end of February. Full repairs might take about a year, Shell has said.
CFO SAYS SHE IS HAPPY WITH BALANCE SHEET DESPITE DEBT
Shell's gearing, or debt to equity ratio including leases, rose to 23.2% from 20.7% at end-2025. Shell had flagged higher debt due to managing war-related price and supply disruptions and volatility.
Gorman told reporters she was very happy with Shell's balance sheet.
Its cash flow from operating activities at $6.1 billion was hit by large swings in inventory values, pushing working capital - a liquidity measure of current assets minus liabilities - to minus $11.2 billion.
Shell expects working capital movements to reverse over time provided oil and gas prices ease. - Reuters
