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Shell shares rise after announcing bumper share buyback despite lower full-year earnings

Shell shares were higher in early trade on Thursday after the oil giant announced another bumper share buyback despite income and adjusted earnings sinking in 2023FY.

Lower oil prices were the main culprit in the falling adjusted earnings and revenue after Brent and WTI oil spent most of 2023 trading significantly beneath 2022 prices.

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Shell shares were 2.3% higher at the time of writing on Thursday.

Adjusted EBITDA fell 19% to $68.5bn in 2023FY, and Adjusted Earnings fell 29% to $28.2bn.

However, Shell has again proved to be a cash-generation machine with a Free Cash Flow of $36bn. This is lower than last year but supports the company’s valuation, especially compared to US peers.

Shell will return cash to shareholders in the form of another $3.5bn share buyback and a $0.344 dividend for Q4 2023. The dividend increased from $0.331 in the last quarter.

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As expected, the integrated gas unit was Shell’s powerhouse, with a strong performance in the fourth quarter, helping contain overall earnings decline in the unit for the full year.

Upstream, Shell’s largest unit concerned with oil extraction, fared better than some may have feared, with Adjusted Earnings growing 7% to $7.9bn in Q4. Upstream Adjusted EBITDA for the full year fell 27%.

The renewables unit still remains a sideshow for Shell, and Adjusted Earnings fell 60% in the full year.

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