Shell's CEO puts on a brave face as profits slide
Thursday, Feb 02, 2017
Royal Dutch Shell PLC's annual profit has tumbled to the lowest level in more than a decade.

Royal Dutch Shell’s fourth quarter 2016 CCS earnings attributable to shareholders were  $1.0 billion compared with $1.8 billion for the same quarter a year ago. Full year 2016 CCS earnings attributable to shareholders were $3.5 billion compared with $3.8 billion in 2015.

Fourth quarter 2016 CCS earnings attributable to shareholders excluding identified items were $1.8 billion compared with $1.6 billion for the fourth quarter 2015, an increase of 14%. Earnings were impacted by charges of $0.5 billion related to deferred tax reassessments which were not included as identified items.

Full year 2016 CCS earnings attributable to shareholders excluding identified items were $7.2 billion compared with $11.4 billion in 2015.

Compared with the fourth quarter 2015, CCS earnings attributable to shareholders excluding identified items benefited from higher contributions from Upstream and Chemicals, partly offset by lower contributions from Refining & Trading. Operating expenses were lower, more than offsetting the impact of the consolidation of BG. Depreciation and net interest expense increased, mainly resulting from the BG acquisition. Earnings also reflected higher taxation.

Fourth quarter 2016 basic CCS earnings per share excluding identified items decreased by 12% versus the fourth quarter 2015. Full year 2016 basic CCS earnings per share excluding identified items decreased by 49% versus 2015.

Cash flow from operating activities for the fourth quarter 2016 was $9.2 billion, which included negative working capital movements of $0.6 billion, compared with $5.4 billion in the fourth quarter 2015, which included favourable working capital movements of $1.6 billion.

Gearing at the end of 2016 was 28.0% (2015 14.0%). There was an increase of 9.7% on acquisition of BG.

A fourth quarter 2016 dividend has been announced of $0.47 per ordinary share and $0.94 per American Depositary Share (“ADS”).

Royal Dutch Shell is expected to announce a dividend of $0.47 per ordinary share and $0.94 per ADS in respect of the first quarter 2017.

CEO statement

“We are reshaping Shell and delivered a good cash flow performance this quarter with over $9 billion in cash flow from operations. Debt has been reduced and, for the second consecutive quarter, free cash flow more than covered our cash dividend.

Production and LNG volumes included delivery from new projects, with ramp-up continuing in 2017 and 2018. Meanwhile we are operating the company at an underlying cost level that is $10 billion lower than Shell and BG combined only 24 months ago. We are gaining momentum on divestments, with some $15 billion completed in 2016, announced, or in progress, and we are on track to complete our overall $30 billion divestment programme as planned.   

Looking ahead, we will further focus the portfolio and strengthen the company’s financial framework in 2017. Our strategy is starting to pay off and in 2017 we will be investing around $25 billion in high quality, resilient projects. I’m confident 2017 will be another year of progress for Shell to become a world-class investment.”

For more information, please visit: http://www.shell.com

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