After being forced to withhold dividends during the COVID-19 pandemic, Shell has marked a return to relative normality with greater profits, enabling it to pay higher dividends and launch a share buyback scheme.
Shell, which still mostly relies on its oil and lubricant businesses, posted quarterly results that beat analysts’ expectations. Analysts had expected soaring profits of £3.7 billion, but its adjusted earnings reached approximately £4 billion, which is an eightfold increase on the same quarter last year, when the industry was reeling from low demand and depressed oil prices.
As a result, Shell CEO Ben van Beurden said the company would start:
“Increasing dividends and starting share buybacks, while we continue to invest for the future of energy. The quality of Shell’s operational and financial delivery and strengthened balance sheet have given the Board confidence to rebase the dividend per share from Q2 2021 onwards to 24 US cents.”
While the dividend is a notable increase on the previous 16 cents, it still remains some way off the 47 cents of pre-pandemic times, indicating that the company has some way to go yet. Nevertheless, investors will no doubt welcome the better-than-expected results. Shell will also be buying back about $2 billion worth of shares over this year.
According to van Beurden, the company will also continue to invest in navigating the energy transition, and the support of shareholders for the massive investment required in alternative energy sources will be critical to realising its ambition of becoming a net-zero energy company by 2050.