Shell announced a rise in its third quarter dividend despite earnings tumbling by more than 80% and cutting thousands of jobs in response to the oil price crash.

The oil giant increased the payout by 4% to 16.65c a share, although that was still considerably behind a dividend of 47c for the same period last year.

In September, the group announced plans to cut between 7,000 and 9,000 jobs, as part of a $2-2.5 billion annual cost saving plan. The shares are trading at a near 25-year low as the collapse in oil demand has caused earnings to plummet.

“Our sector-leading cash flows will enable us to grow our businesses of the future while increasing shareholder distributions, making us a compelling investment case,” said chief executive Officer, Ben van Beurden. “We must continue to strengthen the financial resilience of our portfolio as we make the transition to become a net-zero emissions energy business.”

The board has approved a cash allocation framework, which on reducing its net debt to $65 billion, will target total shareholder distributions of 20-30% of cash flow from operations. Net debt declined to $74 billion at the end of September, from $78 billion at 30 June.

However, cashflow from operations declined 15% compared with the same quarter last year, while adjusted earnings dropped 80%. While the oil products division reported a 16% decline in adjusted earnings to $1.7 billion, that was dwarfed by the decline sustained by the upstream business, which recorded an $884 million loss.

The rise in the third quarter dividend is an improvement on rival BP, which chose to hold its payout for the September quarter steady with the 5.25c level announced in August.

The group reported a $450 million loss attributable to shareholders for the quarter, compared with a $749 million loss the same time last year.


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Published: December 1, 2020
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