Shell Surprises with Strong Profits, Announces New Buyback Program

Shell has announced another share buyback and increased dividends after reporting better-than-expected Q4 profits. The company’s shares, which had experienced a pullback to a 5-month low in January following a record high in October, rose to a 3-week high in early trade.

Shell’s integrated gas segment exceeded forecasts with profits of $3.96 billion, while the upstream business also performed well, contributing to Q4 profits of $7.3 billion, surpassing the consensus of $6.4 billion. Even the chemicals division, which had faced challenges in the past year, posted an unexpected profit of $83 million in Q4. Shell plans to increase its dividend by 4% and initiate a $3.5 billion buyback, funded by a rise in net debt to $43.5 billion.

The company cited a focus on returns and high-return models as contributing to the positive results, with reduced capex in renewables. Despite a decline in free cash flow to $6.9 billion, Shell remains optimistic about 2024, expecting total capex between $22 billion and $25 billion, in line with 2023 spending.

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