Shell increases dividend after beating Q3 forecasts

[LONDON] Royal Dutch Shell on Thursday increased its dividend after easily beating third-quarter profit forecasts even as the energy company warned of "significant uncertainty" because of the pandemic.

The Anglo-Dutch company said it would boost its dividend on an annual basis in a sign of renewed confidence after it cut its dividend in April for the first time since the 1940s in response to the slump in oil prices as Covid-19 shrank energy demand.

Shell is planning a major restructuring as part of a plan to reduce greenhouse gas emissions to net zero by 2050 and "a complete overhaul" over the next 30 years.

Shell's adjusted earnings in the third quarter fell 80 per cent to US$955 million but easily beat company-provided average analysts forecasts of a US$146 million profit.

The results were driven by a record profit from Shell's marketing division, which includes the world's biggest retail network. Earnings in the segment were up 10 per cent on the year at US$1.6 billion for the quarter.

Shell, the world's biggest Liquefied Natural Gas trader, wrote down the value of its LNG portfolio by just under US$1 billion in the quarter, focusing on its flagship Prelude project in Australia.

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"As a result of Covid-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products," Shell said in a statement.

Shell's shares have dropped by more than 60 per cent so far this year, more than any other major oil company, as investors fret over the impact of the pandemic on energy demand and the company's ability to cover costs even the April dividend cut.

Concerns about the world's shift to low-carbon energy have also weighed on the sector.

Shell said on Thursday it would reduce the number of its oil refineries from 14 sites to six "energy and chemical parks".

REUTERS