Shell starts its new ‘era’ raising dividends

Royal Dutch Shell said Thursday it is starting a new era of dividend growth, as it announced a portfolio reshape to meet cleaner energy needs, Kallanish Energy reports.

The supermajor decided to raise its dividend by 4% to 16.65 cents in the third quarter and annually thereafter. In April, it had slashed the payout by 66% to 16 cents.

“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,” CEO Ben van Beurden said in Shell’s Q3 results presentation.

Together with CFO Jessica Uhl, van Beurden outlined the “compelling investment case” for Shell, both casually dressed in jeans.

Basically, the upstream business – focused on nine core areas — will fund Shell’s strategy. Integrated Gas and Chemicals & Products are the transition businesses, the enablers of the strategy; while Marketing, Power, Hydrogen and Biofuels become the growth businesses delivering the “future of energy.”

“We must continue to strengthen the financial resilience of our portfolio as we make the transition to become a net-zero emissions energy business,” added van Beurden. “The strength of our performance gives us the confidence to lay out our strategic direction, resume dividend growth and to provide clarity on the cash allocation framework, with clear parameters to increase shareholder distributions.”

The “reshaping” of Shell targets a simpler, streamlined organization. In December, its senior leadership will be announced. Details on the organizational design will be revealed by January 2021 and the new format should “go live” in July/August 2021.

The Anglo-Dutch giant reported a net profit attributable to its shareholders of $489 million, which is 92% lower than the $5.87 billion profit recorded in 3Q19. The results reflect lower realized prices for oil and LNG, as well as lower realized refining margins and production volumes, compared with 3Q19. The net income to shareholders was also impacted by an impairment charge of $1.1 billion.

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