Royal Dutch Shell (LON:RDSa) confirmed that third-quarter net profit jumped by 40% to $5.6 billion, which undershot the $5.7 billion that equity analysts were expecting. The upstream and integrated gas divisions posted a 235% and 78% jump in profit respectively. The downstream division registered a 24.6% fall in earnings. Cash flow from operating activities jumped by 59%. The dividend was unchanged at 47 cents. The group said the first tranche of the share buyback scheme was completed, and today it began the second tranche of the programme. The figures were impressive but given the rally in the oil market, and the solid figures from BP (LON:BP) during the week, traders were left a little unimpressed with today’s update.
Royal Dutch Shell had an impressive second-quarter as net profit jumped by 30% to $4.69 billion, but undershot the $5.96 billion that analysts were expecting. The firm also launched a $25 billion share buyback scheme, which wasn’t a total surprise as shareholders were half expecting some sort of cash return.
The group’s disinvestment programme is going well, and in the final quarter of 2017, the group stopped its scrip dividend. Cash flow at the company is clearly strong and this also bodes well for shareholder confidence.
In the second-quarter the net debt position was reduced to $62 billion after it was trimmed by $4 billion. The gearing ratio was 23.6%, and keep in mind the peak level was 29.2% in late 2016. A reduction in gearing is a step in the right direction, but some traders might question the size of the share buyback scheme when tens of billions are still outstanding.
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