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Shell more than doubles profit in fourth quarter
Royal Dutch Shell's profit more than doubled in the fourth quarter as the oil company gained from higher oil prices and increased efficiency.
Earnings for the three months to the end of December jumped 140% to $4.3bn (£3bn), slightly ahead of analysts' consensus figure of $4.2bn. The figure was calculated on a constant cost of supply basis excluding certain items.
Group revenue jumped to $85.4bn in the fourth quarter from $64.8bn a year earlier. For the full year, revenue rose to $305.2bn from $233.6bn and earnings more than doubled to $15.8bn from $7.2bn.
The results show Shell recovering from the oil price slump that started in 2014. Brent Crude collapsed from $110 a barrel in summer 2014 to less than $30 in early 2016 but has since risen to more than $60 as the global economy has picked up. Shell also dealt with the price slump by selling assets, reducing costs, paying off debt and cutting jobs.
But Shell's shares fell after it reported weakening cash flow in the fourth quarter, damping hopes of dividend increases after Shell's decision in November to scrap its scrip dividend, which paid investors in shares. Cash flow from operating activities in the fourth quarter was $7.3bn compared with $35.7bn for the full year. The shares were down 1.1% at £24.35.5p at 08:46 GMT.
Steve Clayton, a fund manager at Hargreaves Lansdown's HL Select UK Income Shares fund, said: "Cash flow was strong for the year, demonstrating Shell's better capital discipline. But Q4 bucked the trend, with a weaker than expected cash inflow ... This is holding the shares back in early trading."
Ben van Beurden, Shell's chief executive, said fourth-quarter cash flow reflected higher tax payments and increased cash requirements at Shell's trading business. The company took a non-cash charge of $2bn triggered by changes to the US tax code though it expects to gain from President Trump's tax cuts in the long run.
He said: "2017 was a year of strong financial performance for Shell - a year of transformation, in which we showed we have what it takes to deliver a world-class investment case. We reported strong earnings for the quarter underpinned by continued delivery momentum. We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash."