Shell beats forecasts with $9.6bn profit

Shell beat forecasts to post a first quarter net profit of $9.65bn (£7.6bn), boosted by strong returns from its trading division and higher liquefied natural gas, which offset lower oil and gas prices

Cash flow from operating activities for the first quarter 2023 was $14.2bn, down 37%, and included a working capital outflow of $0.8bn and tax payments of $3.1bn. Earnings beat a company-provided forecast of $8bn.

The company also announced a new $4bn share buyback and held its dividend at $0.2875 per share.

Continuing surging oil company profits, driven by higher prices, have reignited calls for a further strengthening of windfall taxes by the UK government as consumers struggle with the cost of living crisis and soaring inflation.

Lower natural gas prices hit the integrated gas business, with profits slumping 18% to $4.9bn, although this was offset by a 139% surge in profits in its chemicals and refined products unit to $1.8bn.

Rival oil giant BP on Tuesday reported underlying profits of $5bn (£4bn) in the first three months of the year, beating analysts’ forecasts of $4.3bn - its second-best results for the first quarter since 2012, when it made $4.7bn, behind last year’s $6.2bn.

Shell said global oil prices averaged $81.7 a barrel in the first quarter, down from $102.2 a barrel in the same period a year earlier, when Russia’s invasion of Ukraine sent commodities prices rocketing.

The results fuelled calls for the current windfall tax regime to be strengthened, with Sharon Graham, general secretary of the Unite union, saying both BP and Shell were “continuing the profiteering bonanza”.

"The scale of profiteering displayed today by Shell and earlier this week BP is one of the corporate scandals of our times. And this is practically untouched by Rishi Sunak’s so-called windfall tax. Not taking any action against ‘Big Oil’ means the profiteering plundering will continue without end.”

AJ Bell investment director Russ Mould said: “In a bid to close a yawning valuation gap to its US peers, Shell is busily buying back shares. This undermines any pleas of poverty amid a push for increased levies on its bumper profit."

Reporting by Frank Prenesti for Sharecast.com