By
Darya Rudz
October 26th, 2023
Shell is struggling with a continuous fall in profits as Q2 2023 figures show significant reductions compared with last quarter and Q2 2022.
Oil giant Shell (LON: SHEL) has posted disappointing profits for Q2 2023, largely caused by a reduction in the prices of fossil fuels.
Shell’s report shows that the British giant saw its adjusted earnings crest at $5.1 billion for the quarter ended June, lower than the expected $6 billion from analysts polled by Refinitiv. This is a steep 55.6% fall from the $11.5 billion for Q2 2023, and 46.8% from Q1 this year.
Despite efforts to ramp up profit, Shell is still focused on reducing emissions. Speaking to CNBC’s Squawk Box Europe, Shell CEO Wael Sawan said the company is looking to make moves that are beneficial for its shareholders but also for the planet. Sawan added:
“We are focused on creating more value with less emissions. And what that means is we will continue to pull all the levers to drive further value growth in the organization, while at the same time we will continue to meet our aggressive emissions reduction targets – both for our own emissions, as well as for our customers.”
Shell has announced share buybacks worth $3 billion to conclude over the next quarter. In addition to reporting a 15% increase to $0.33 per share in the quarterly dividend, Shell is true to its word on doing right by shareholders. However, RBC Brew Dolphin investment manager Stuart Lamont believes this would “inevitably come with questions attached in the current environment”.
Shell Plans Past Q2 2023
The British oil giant received some criticism after it announced a decision to maintain current oil production levels until the decade ends. Activist shareholder group Follow This believes that avoiding new output cuts pushes Shell “on a collision course” with the 2015 Paris Agreement. The agreement includes several points, including a long-term global warming goal and a target to reduce greenhouse gas emissions every five years.
At Shell’s shareholder meeting in May, Follow This garnered 20% support. The group’s founder Mark van Baal insists that Shell is still accountable to the 20%. Nonetheless, Shell has confirmed its commitment to following climate targets. The company assures it is on course to achieving net-zero status by 2050.
Shell intends to spend $15 billion on low-carbon projects over the next three years. Asked whether this will appease climate activists, Shell CEO Sawan said the company’s focus is doing right for its own health and for its shareholders. Although Shell focuses on a balanced energy transition, Sawan said the company looks to deploy capital so shareholders can see returns.
Sawan also added that Shell is very willing to grow its capital if it sees new opportunities that will help do so. According to the CEO, the company cannot grow its capital “on the basis of activist noise”.
A few other oil companies also recorded reduced earnings. TotalEnergies reported a 49% plunge in adjusted income to $5 billion from the same period last year. Norway’s Equinor also recorded a 57% crash in Q2 profit compared to Q2 2022.