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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