Shell Posts Narrowed 3Q Profit, Pledges to Cut Debt Amid New Cash Allocation Framework
29 October 2020 - 6:57PM
Dow Jones News
By Jaime Llinares Taboada
Royal Dutch Shell PLC on Thursday reported significantly
narrowed profit for the third quarter and unveiled a new cash
allocation framework which includes a target to reduce net debt to
$65 billion.
The Anglo-Dutch oil major made a net profit of $489 million in
the three months to Sept. 30, narrowing from $5.88 billion profit a
year earlier. Weak oil and gas prices and low demand for refined
products continued to impact its business.
Shell also posted an adjusted CCS profit--a figure similar to
the net income that U.S. oil companies report, but strips out
exceptional items--of $955 million. It beat the market consensus of
$146 million taken from Vara Research and based on 26 analysts'
forecasts, and improved on quarter from $638 profit reported in the
previous quarter.
Alongside the quarterly earnings, Shell announced a new cash
allocation strategy to reduce debt, increase shareholders'
distributions and allow for disciplined growth. The company intends
to use future cash flows to grow its low-carbon businesses.
"We must continue to strengthen the financial resilience of our
portfolio as we make the transition to become a net-zero emissions
energy business. Our decisive actions taken earlier in the year
have solidified our operational and cash delivery," Chief Executive
Ben van Beurden said.
As part of this framework, Shell said it will cut net debt to
$65 billion from $73.5 billion as at Sept. 30, and afterward
distribute 20%-30% of operating cash flows via dividends and share
buybacks.
The FTSE 100 group declared dividend growth of around 4% for the
third quarter and annually thereafter. It proposed a payment of
16.65 cents for the third quarter, up from 16 cents previously.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
October 29, 2020 03:42 ET (07:42 GMT)
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