Shell Surpasses Forecasts with $7.7 Billion Quarterly Profit in 2024.
Shell has reported a profit of $7.7 billion for the second quarter of 2024, surpassing analysts’ expectations of $6.46 billion. While this figure marks a decline from the $9.65 billion profit reported in the same quarter last year, it reflects the company’s robust operational and financial performance amid challenging market conditions.
“Shell delivered another strong quarter of operational and financial results. We further strengthened our leading LNG portfolio and made good progress across our Capital Markets Day 2023 financial targets, including $1.7 billion of structural cost reductions since 2022,” said CEO Wael Sawan.
The company’s cash flow rose by 6% from the previous quarter, reaching $13.3 billion, driven by strong operational performance, particularly in the liquefied natural gas (LNG) division. This strength in operations and trading activities helped Shell counterbalance the effects of declining natural gas prices.
LNG production saw a 7% increase from the previous quarter, reaching 7.58 million metric tons, though sales dropped by 7% to 16.87 million tons. The rise in production was largely attributed to the Prelude floating LNG facility off Australia’s western coast. Overall, Shell’s oil and gas production increased by 3% to 2.91 million barrels of oil equivalent per day.
Shell’s chemicals and products divisions, which include refining and oil trading, reported a significant surge in adjusted earnings, rising more than threefold from the previous quarter to $2.8 billion. This boost was partly due to disruptions in shipping through the Red Sea and outages at Russian refineries caused by Ukrainian drone attacks, according to finance chief Sinead Gorman.
Gorman also noted that Shell’s strategic decision to schedule refinery maintenance in the last quarter of 2023, while many competitors chose the first quarter, gave the company a competitive edge in supplying refined products like gasoline and diesel.
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Despite Shell’s strong financial performance, CEO Sawan remarked that the company’s shares are currently trading below their “fair market value.” However, he indicated that Shell is not actively considering a switch to a New York listing, a move that some other companies have explored.
Shell’s stock has risen by about 14% this year, fueled by Sawan’s efforts to reduce costs and focus on the company’s most profitable operations. In March, Shell adjusted its 2030 carbon reduction target and eliminated a 2035 goal, citing strong anticipated demand for gas and uncertainties in the energy transition. Nevertheless, the company reaffirmed its commitment to achieving net-zero emissions by 2050.
Looking ahead, Shell’s shareholders will vote on the company’s strategy later this month, including a resolution urging stronger climate targets. Additionally, Shell plans to repurchase another $3.5 billion of its shares over the next three months, maintaining the same pace as the previous quarter, while keeping its dividend steady.
