Daily Management Review

Shell returns to paying dividends in cash


11/28/2017


British-Dutch Royal Dutch Shell will return to paying dividends in cash and will increase investments in clean energy after more than two years of cutting costs, writes Reuters.



Toronto History via flickr
Toronto History via flickr
Starting from the IV quarter, Shell will stop paying dividends in shares. This scheme was introduced in early 2015 to help save cash, after oil prices fell by more than half compared to more than $ 100 per barrel, and the company bought BG Group for $ 54 billion.

In the updated strategy, Shell confirmed its plans to buy back its own shares for $ 25 billion in 2017-2020 to compensate for the dilutive effect of dividend payments in shares. The company did not specify the time for the launch of the share repurchase program.

Shell also raised the outlook for free cash flow from $ 25 billion to $ 30 billion in 2020, suggesting that the price of oil will be $ 60 per barrel.

Shell managed to dramatically increase revenues in the last few quarters due to a significant reduction in costs, a reduction in thousands of jobs and the sale of assets. The company adapted its operations for profit at an oil price of $ 50 per barrel.

The British-Dutch company in the III quarter increased its profit by 47% to $ 4.1 billion, which is due to the growth of refining and trading operations.

However, cash flow from operating activities in the III quarter decreased by 11% compared to the same period last year to $ 7.58 billion, interrupting the growth series of six consecutive quarters, under the influence of measures to reduce costs.

Net profit attributable to shareholders (based on the current cost of supply and excluding extraordinary expenses) in the third quarter was $ 4.1 billion, compared with $ 2.8 billion a year earlier.

Recall that Shell has increased its investment plan for its new division, which focuses on renewable energy sources and low-carbon technologies, from $ 1 billion to $ 1-2 billion by 2020.

"We must start with something, and we need to build a platform that can take an active part in the further electrification of the world," Shell’s chairman Ben van Beurden told reporters.

The company, which in recent months has made a number of investments in electric vehicle technology, said it intends to reduce greenhouse gas emissions by 20% by 2035 and twice - by 2050.

It is planned that the new energy unit will become one of the main engines of Shell's growth after 2020, said the company’s financial director Jessica Uhl.

source: reuters.com






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