Shell Announces $3.5 Billion Share Buyback, Better-Than-Expected Profit

Energy giant Shell (SHEL) on Thursday reported a 2023 profit of $28 billion, down almost 30% from the previous year, but said it will raise its dividend and hand back $3.5 billion to shareholders.

In its fourth-quarter earnings release the Anglo-Dutch firm announced adjusted earnings of $7.3 billion which beat analysts’ expectations for $6 billion. However, that was down from a record $9.8 billion in the previous year due to falling oil & gas prices. The company said it handed back $23 billion in 2023 but would still be raising its dividend by 4% from the previous quarter and increasing its share buyback program by $3.5 billion.

Shell said its capital expenditure in 2023 was $24.4 billion with a 2024 forward guidance of $22 billion-25 billion. Analysts may be concerned that free cash flow at the company has fallen steadily from $15.5 billion in Q4 2022, to $6.9 billion in the latest quarter.

CEO Wael Sawan took over the energy giant at the start of 2023 vowing to be “ruthless” in improving performance and investor returns. The company started cutting jobs in January of 2024, with Sawan saying on Thursday’s earnings call that the company has “already achieved $1 billion in structural cost reductions,” of his planned $2 to $3 billion in cuts by the end of 2025.

A month ago analysts speculated whether Shell may join its rivals Exxon (XOM) and Chevron (CVX) by snapping up assets in the Permian basin, with Endeavour Energy (EDR) said to be seeking a sale of around $30 billion.

Shares in Shell were up 2.5% at $64.46 at around 11:00 a.m. ET Thursday. The stock has gained about 10% over the past year.