Shell to Report Even Higher Profits for 2Q — Earnings Preview

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By Jaime Llinares Taboada

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Shell PLC is scheduled to report results for the second quarter on Thursday. Here’s what you need to know:

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ADJUSTED EARNINGS: As tensions between Russia and Western countries place further stress on global energy markets, Shell is expected to report another extremely profitable quarter. Adjusted earnings are forecast at $10.99 billion for the three months ended June 30, according to the Vara market consensus based on 24 analysts. This would be up from $9.13 billion in the first quarter and $5.53 billion in the second quarter of 2021.

CASH FLOW FROM OPERATIONS: The multinational energy group is forecast to post operating cash flow of $13.61 billion for the second quarter, according to the same consensus, which would be down from $14.82 billion in the first quarter. Shell will report another “monster set of cash flow figures”, RBC Capital Markets’s analyst Biraj Borkhataria said Tuesday.

WHAT TO WATCH:

-REFINING: A main source of earnings growth for Shell in the second quarter could be the refining business. The company has already flagged that soaring refining margins added up to $1.2 billion of earnings in the second quarter. The market consensus forecasts that the Chemicals & Products division’s profits rose to $1.85 billion in the second quarter from $1.17 billion in the first quarter.

-SHAREHOLDER RETURNS: With Shell’s cash flow generation expected to stay strong in the second quarter, shareholders will be eager to see the money going into their pockets. RBC’s Borkhataria expects Shell to repurchase a further $7 billion worth of shares in the second half and increase the dividend by 30%. “We retain our view that a significant increase in DPS is both affordable within the financial framework and defendable through the cycle,” the analyst said in a recent note.

-3Q OUTLOOK: The group’s guidance for the third quarter will also be watched. Shell usually provides forecasts for hydrocarbon production, refinery and chemicals plants utilization, marketing and chemicals sales volumes, and corporate expenses.

Write to Jaime Llinares Taboada at [email protected]; @JaimeLlinaresT

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Credit: www.marketwatch.com /

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