Shell shares dropped this morning as it reported its lowest second-quarter profits since 2016, as earnings slumped more than 25 per cent.
The oil and gas major suffered from lower oil and gas prices. Shares were down four per cent in early morning trading.
Shell profits fell 25 per cent to $3.6bn (£2.9bn) on a year-on-year basis for the second quarter. This fell well short of analyst forecasts of between $4.7bn and $4.9bn.
Cash flow from operating activities was $11bn, while revenue was $90.5bn, down from $96.7bn for the same period last year.
Net debt was largely stable, rising to $74.9bn from $72.2bn this time last year.
Total oil and gas production rose four per cent to 3.5m barrels of oil equivalent per day.
The firm reported a dividend of 47 cents per share.
Why it’s interesting
Shell’s failure to meet analyst expectations comes in stark contrast to rival BP yesterday, which exceeded them.
The difference was partly because BP counteracted low oil and gas prices by ramping up production seven per cent. Shell also increased its production volumes, but only by four per cent.
However, European competitors such as Total and Eni also saw considerable falls in second-quarter profit.
Shell has cut costs in recent years. It has sold $30bn-worth of assets in an attempt to cut its debt, which grew when it bought BG Group for $54bn in 2016.
Brewin Dolphin investment manager David Barclay said the results “will be a concern for many watchers of the company – cash flow and gearing have also gone in the wrong direction and will be the other major areas to keep an eye on in the months ahead”.
What Shell said
Chief executive Ben van Beurden said: “We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices.
“The resilience of our upstream and customer-facing businesses and their ability to generate cash support the delivery of our 2020 outlook, which remains unchanged.”
Main image: Getty