Higher oil prices push Shell earnings up 184 per cent

 
Caitlin Morrison
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Shell was boosted by higher oil prices (Source: Getty)

Royal Dutch Shell has reported a 184 per cent increase in income for 2017, thanks in part to higher oil and gas prices.

The figures

Income rose to $12.98bn (£9.11bn) last year, compared with $4.58bn in 2016.

Basic earnings per share rose 172 per cent, from $0.58 to $1.58, and the dividend was maintained at $1.88.

The oil giant made capital investment of $24bn in 2017, down from $79.9bn the year before - however, this included $53bn related to the takeover of BG Group.

Why it's interesting

Despite Shell's figures coming in ahead of expectations, the stock was down around two per cent in early trading, reflecting a weaker than expected cash inflow in the fourth quarter.

Steve Clayton, fund manager of the Hargreaves Lansdown Select UK Income Shares fund, pointed out that cash flow was strong for the year, "demonstrating Shell’s better capital discipline", but noted that "Q4 bucked the trend, with a weaker than expected cash inflow, reflecting swings in the trading businesses’ derivative positions and higher tax charges".

The group said it booked a $2bn charged in the fourth quarter, due to the impact of US tax reform introduced by Donald Trump.

What Shell said

Chief executive Ben van Beurden 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. Our relentless focus on value, performance and competitiveness meant we were able to deliver $39bn of cash flow from operations excluding working capital movements from our upgraded portfolio.

"We strengthened our financial framework during the year through an $8bn reduction in our net debt, while our increased free cash flow generation gave us the confidence to cancel the scrip dividend programme in the fourth quarter, in line with what we said previously.

"We reported strong earnings for the quarter underpinned by continued delivery momentum. Cash flow reflected higher tax payments and increased cash requirements in relation to our trading business. We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash."

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