Oil giant announces record annual profits
Shell said last month that windfall taxes imposed by the European Union and the United Kingdom following the profit hike would cost the group around $2 billion.
Paul Ellis | AFP | Getty Images
British oil giant Shell posted its highest-ever annual profit on Thursday, buoyed by soaring fossil fuel prices and robust demand since Russia’s large-scale invasion of Ukraine last year.
Shell reported adjusted earnings of $39.9 billion for the year 2022. This comfortably exceeds the $28.4 billion in 2008, which Shell said was the company’s previous annual record and represents more than double the company’s profit for the year 2021 of $19.29 billion.
Analysts polled by Refinitiv expected net profit for the full year 2022 to be $38.3 billion.
For the last quarter of 2022, Shell reported adjusted earnings of $9.8 billion.
Shell announced a $4 billion share buyback program, which should be completed by its first quarter 2023 results – due in early May – and a 15% increase in the fourth quarter dividend per share.
“It’s a huge year for Shell and a huge year to watch as well,” Shell CEO Wael Sawan told CNBC’s Steve Sedgwick during his first earnings interview since taking office. January 1st.
“I feel privileged to step into this role at such an important time in the company’s history. Looking to the future, I believe we have a unique opportunity to be able to succeed as a transition winner. We have a portfolio that I think is second to none,” Sawan said.
“I will focus a lot on performance and capital discipline,” he added.
The results follow in the footsteps of the historic annual profits of U.S. oil majors Exxon Mobil and Chevron, with the largest Western oil and gas companies expected to make combined profits of nearly $200 billion for the year, according to Refinitiv data.
The extraordinary scale of industry profits has renewed criticism and prompted calls for a windfall tax on big oil companies.
Shell said last month it expected to take a hit of $2bn for the last three months of 2022 due to new taxes in the European Union and the UK.
“Ultimately governments have to decide taxes. Of course, we engage and provide insight and the key perspective we’re trying to provide is the context around the fact that companies like ours that have to invest billions of dollars to support the energy transition require a secure and stable investment climate,” said Sawan.
“For example, windfall taxes or price caps simply erode confidence in the stability of investment and so I am concerned about some of the measures taken,” he continued.
“I think there’s a different approach that needs to be taken, which is to really attract investment capital at a time when we need to be able to integrate energy security into the broader energy system here in Europe. .”
Shares of the London-listed company rose 0.6% in early morning trading on Thursday.
Shell said its outlook for cash capital expenditures for 2023 is between $23 billion and $27 billion. Of that amount, Sawan said about a third or even a little more would go into areas such as renewable energy.
Shell, which aims to become a net-zero emissions company by 2050, said adjusted profit for its Renewable and Energy Solutions unit was $293 million for the last three months of 2022, down from $383 million. dollars in the third quarter.
“Shell cannot claim to be in transition as long as investments in fossil fuels eclipse investments in renewables,” said Mark van Baal, founder of the Dutch group Follow This.
“The bulk of Shell’s investment remains tied to fossil fuel companies, as the company does not aim to reduce its total CO2 emissions this decade, as needed to reach Paris.”
In recent quarters, Big Oil executives have defended rising profits and said the significant disruption to global energy markets from the war in Ukraine has reaffirmed the importance of helping solve “the trilemma energy”.
According to a statement to investors from BP CEO Bernard Looney late last year, this refers to “secure, affordable, and low-carbon energy”.
Climate activists and activist shareholders have been sharply criticized.
“The fact that Shell’s annual profits more than doubled last year, when millions of people were faced with the impossible choice between putting food on the table and heating their homes, is nothing short of staggering,” he said. said Sana Yusuf, climate activist at Friends of the Earth.
“People can see the injustice of paying exorbitant energy costs while big oil and gas companies are raking in billions,” Yusuf said.
U.S. oil giant Exxon Mobil reported 2022 earnings of $56 billion on Tuesday, marking an all-time high for the western oil industry, while Chevron on Friday posted record earnings of $36.5 billion for the year. last.
British oil giant BP is due to release its annual results on Feb. 7, and France’s TotalEnergies is expected to follow on Feb. 8.