London (AFP) – British energy giant Shell on Thursday said its net profit slid 23 percent in the first six months of the year, hit by lower oil and gas prices. Profit after tax dropped to $8.4 billion compared with $10.9 billion in the first half of 2024, Shell said in an earnings statement. Group revenue dropped nearly nine percent to $136.6 billion in the reporting period.
Shell pointed to “lower realised liquids and gas prices,” while chief executive Wael Sawan said the company had been operating “in a less favourable macro environment.” Energy prices have come under pressure in recent months on concerns that US President Donald Trump’s tariffs will hurt economic growth, while OPEC+ nations have produced more oil. “Against a backdrop of geopolitical and economic uncertainty we saw knock-on effects on both physical trade flows as well as commodity prices and margins more broadly,” Sawan added. “In spite of this, we delivered a robust set of results, with strong operational performance.”
Shell’s adjusted earnings beat market expectations, helping to lift its share price by 2.5 percent in early London trade. Its stock won additional support from Shell’s latest dividend payment and news that it plans to repurchase $3.5 billion of shares. “Shell’s diversity of operations across oil, gas, chemicals, and retailing regularly allows one area of strength to counter another of weakness,” Keith Bowman, equities analyst at Interactive Investor, said following the results update. However, he cautioned that “heightened geopolitical tensions and potential for operational disruption remain an investor concern.”
Shell in March announced plans to slash costs by billions of dollars and increase shareholder returns, as it focuses on its liquified natural gas (LNG) business. Shell aims to reduce costs by between $5 billion to $7 billion by 2028, compared with 2022 levels. Savings to date stand at $3.9 billion, Sawan noted Thursday. Shell’s previous target had been for savings of between $2 billion and $3 billion by the end of 2025, which involved hundreds of job cuts across its oil and gas division.
Gas is being touted by energy companies as cleaner than other fossil fuels as countries around the world strive to reduce their emissions and slow global warming. Earlier this year, Shell’s British rival BP launched a major pivot back to its oil and gas business, shelving its once industry-leading ambitious renewable energy strategy. BP publishes its latest earnings on Tuesday.
© 2024 AFP
