Shell has posted a fall in profits in the third quarter.
The oil giant’s profits fell 25% quarter-on-quarter to $4.1bn, which was below analyst expectations.
“Normally one shouldn’t get too hung up over a mere three months’ trading, but this was meant to be Shell’s big quarter, given the surge in oil and gas prices in the past few months. Sadly, it has missed earnings forecasts and left investors feeling frustrated,” says Russ Mould, investment director at AJ Bell.
Whilst some analysts focused on the headline earnings miss, others focused in on Shell’s cash flow that plays a significant part in the group’s distributions to shareholders.
“These are a muddy set of results from Shell. The rapid swings we’ve seen in oil & gas prices over the last 18 months mean the group has had to take a large writedown in the value of the derivatives it took to out hedge itself against a further price fall. These have officially pushed the group into a loss for the quarter. However, the underlying numbers, and particularly the all-important cash flow numbers, are looking far more upbeat,” said Nicholas Hyett, Equity Analyst at Hargreaves Lansdown.
Climate Targets
Shell has also set new climate targets for itself. Whilst the group has already pledged to become net-zero by the year 2050, the group has also said that it will cut 2016 levels of emissions from operations and electricity it uses by 50% by the year 2030.
Earlier this year, the Dutch Court ruled Shell to reduce its worldwide carbon emissions by 45% by the end of 2030. The ruling aimed at bringing the company in line with the Paris Agreement, is the first of its kind in history.
“The court orders Royal Dutch Shell … to reduce its CO2 output and those of its suppliers and buyers by the end of 2030 by a net of 45% based on 2019 levels. Royal Dutch Shell has to implement this decision at once.”