By
Darya Rudz
October 26th, 2023
Shell stock in 2019 plunged as well as the company’s profit that didn’t meet the expectations. The company says the fall in oil prices significantly affected its results.
Shell stock has dropped quite significantly for 2019, disappointing the company’s teeming investors. The company released the figures earlier today, explaining several reasons for the sad drop in its net profit. The Royal Dutch Shell company believes that several challenges revolving around macroeconomic instability and a drop in the value of oil and gas.
Shell Stock Figures for 2019
Shell says its profit calculated using the current cost of supplies (CCS), which is data calculated like general net income, fell to $871 million from $7.33 billion in the 2019 third quarter. Earnings calculated based on CCS but without identified items also fell from $5.69 billion to $2.9 billion.
Quarterly figures also put the company’s net profit for shareholders at $965 million, a heavy drop from the previous $5.59 billion. Financial data and software company FactSet had a much better estimate at $3.36 billion.
Away from quarterly figures, Shell’s 2019 full-year net profit stands at $16.462 billion. This is, however, a year-over-year (YOY) plunge of about 23% from 2018 which saw total profits of $21.404 billion. The figure is also at least $1.3 billion less than analysts’ average estimation of $17.770 billion.
As for the price of Shell stock, it is also going down. Now its price is around 24 EUR which reflects a 3% decline. If we compare this result with the figures for January 2019, we will see that at that time the price was around 26-27 EUR. There were no significant ups within these 12 months. The price was slowly moving down.
Shell has said that the crash was due to several reasons including an unprecedented plunge in the price of oil and gas. The company also said that the overall margins from its refineries and other chemical process are becoming considerably weaker.
Moving Forward
The company had earlier announced its intention to run a share buyback program worth $25 billion. It has however warned that the state of the global economy could affect the progress of the buyback program.
The company really does want to complete the program. Speaking to CNBC’s Squawk Box Europe Royal Dutch Shell CEO Ben van Beurden reiterated the plan. The CEO, however, suggests that the pace with which the program will run could be dependent on macroeconomic conditions. He said:
“If we want to do everything that we said we needed to do, which is continue to invest in growth, continue to buy back shares – $25 billion worth of it – and reduce the net debt then, of course, the macro will probably force some choices on us.”
He then adds that the company intends to go on, suggesting that it will carry out its promises if things go well.
“We are not in the process of making quarterly updates of what we think of the macro but we will be very clear that our strategy and our intentions are completely unchanged from what they were in June last year.”
Coronavirus Could Be a Big Factor
The price of oil, among other assets, has suffered a decline because of the coronavirus. The International benchmark for Brent lost 1.3% with the U.S. West Texas Intermediate (WTI) losing 1.4%. As the coronavirus continues to spread, Shell might have a hard time meeting up with proposed numbers if prices continue to slump.