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Royal Dutch Shell Plc fell to the lowest in more than two years after it scaled back share buybacks, underscoring the pressure on Big Oil due to slumping natural gas prices and weaker refining and chemicals.
The energy giant’s fourth-quarter results, which also missed profit expectations, set a gloomy tone for what is expected to be a broadly weaker set of earnings for the industry. The final months of last year saw gas trade at historically low prices, while slowing economic growth shrank margins from making fuel and chemicals.
The Anglo-Dutch company will probably miss its target of buying back $25 billion of shares by the end of 2020 if the macro-economic environment doesn’t improve, Chief Executive Officer Ben van Beurden said in a Bloomberg TV interview. Shell, which is currently about $10 billion short of that goal, said the next tranche of repurchases won’t exceed $1 billion, compared with $2.75 billion in each of the previous three quarters.
“We just have to take a prudent look going forward,” van Beurden said. “If we don’t see a recovery in the macro, yes, we will see $25 billion slipping into a later period.”
Shell’s B shares had fallen as much as 4.1% to 2,037 pence as of 9:19 a.m. in London, the lowest since April 2017.
“Shell’s disappointing 4Q results, with adjusted earnings below consensus, largely confirm our concerns of the waning attainability of 2020 buyback and deleveraging targets while challenging macroeconomic and commodity price conditions show no sign of easing.” — Bloomberg Intelligence Global Energy Analyst Will Hares
Adjusted net income for the fourth quarter was $2.93 billion, down 48% from a year earlier…
Source: FuelFix
