The Shell PLC (LON: SHEL) share price rose 2.27% after its Q2 fiscal 2023 financial results were released. The oil major’s profits fell by over half to its Q2 2023 profit of $5.07 billion from its Q2 2022 profit of $11.5 billion. The Q2 profits also missed analysts' expectations set at $5.61 billion.
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The oil giant attributed its lower profits to falling crude oil prices, lower volumes and margins, and weaker trading activities. Investors were expecting lower profits, given the profit warning issued by the company earlier this month about its chemicals division.
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Shell has moved boldly back into hydrocarbons under new CEO Wael Sawan, ignoring calls to decarbonise at all costs. Major oil companies, including Shell, have now seen that hydrocarbons remain a crucial energy source despite the move to embrace cleaner energy sources.
Therefore, as the oil major seeks new oil sources and expands its exploration portfolio, the company is still paying attention to the renewables sector. However, profits in the division also fell significantly. Oil companies are no longer afraid of public discussions about their negative impact on society, given oil’s importance to the global economy.
Shell reported a loss of $468 million from its chemicals division, which was luckily offset by the $917 million profit booked on the products side. However, the decline in profitability for the division was quite significant, about 80%.
The energy major’s profits in its integrated gas division fell to $2.5 billion, marking a 34% decline from the same quarter last year and an almost 50% decline from Q1. The company’s upstream oil activities saw a 66% decline in adjusted profits to $1.68 billion compared to Q2 2022.
Shell also announced the start of a $3 billion share buyback programme covering an aggregate contract term of approximately three months. The company intends to reduce its issued share capital and, as a result, will cancel all the repurchased shares. The programme is expected to end by 2 November 2023.
The company also announced an interim dividend payment of US$ 0.331 per ordinary share for the second quarter of 2023. The company’s outlook looks shaky as crude oil prices remain depressed.
*This is not investment advice.
Shell share price.
The Shell share price fell 2.27% to trade at 2340.3p, from Wednesday’s closing price of 2393.5p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.