Thursday, 1 May 2014

Royal Dutch Shell 1st quarter results



Royal Dutch Shell a global group of energy and petrochemical companies. I have a holding in my income portfolio (epic code: RDSB)


Shell announced first quarter results yesterday and they seem to have been well received by the market.  Revenue at $109.7bn was similar to the fourth quarter and 2.8% below last year.  Earnings were $4.5bn compared to $8.2bn last year, although excluding exceptional items earnings were $7.3bn down 2.7%.  Basic EPS was down 44% to $0.71, but excluding those exceptional items again adjusted EPS was down 1.7% to $1.17.

The largest item included in exceptional items of $2.9bn during the quarter was $2.3bn for impairments to refineries in Asia and Europe.

Oil production was down 10% and gas production down 8%.  This compares to production at Exxon in their first quarter (announced today) of oil down 2.1% and gas down 9.1%. 

Capital expenditure was $7.4bn approximately 6% lower than last year.  Exxon managed a 28% reduction in their capital expenditure.

With operating cash flow up almost 20% to $13.7bn and the reduced capital expenditure, free cash flow at $6.3bn showed a substantial improvement of 75.6% compared to last year.  This and the confirmation that $15bn of divestments are still planned for 2014-15, was the reason for the positive market reaction.

It is important that capital expenditure is tightly controlled as promised, last year Shell spent in excess $40bn consuming all of the operating cash flow, despite starting the year in relatively modest fashion.

A 4.4% increase in the first quarter dividend was declared taking it to $0.47. 

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