Shell profits sink to a 20-year low, drops 71% YOY

Shell profits sink to a 20-year low, drops 71% YOY
2 years ago
2 mins read

Giant oil company Royal Dutch Shell (AMS: RDSA) had reported its sharpest drop in full-year profits in two decades for 2020, a period when the coronavirus pandemic plunged the global oil sector in losses. 

Financial results released on February 4 show the company recorded adjusted earnings of $4.85 billion in 2020, reflecting a drop of 70.6% from 2019’s profit of $16.5 billion. For Q4 2020, Shell reported adjusted earnings of $393 million.

In an apparent sign of confidence, Shell plans to raise its dividend in the first quarter of 2021 to $0.1735 per share, an increase of 4% from the previous quarter.

Shell’s income attributable to shareholders also declined by 237% to a loss of $21.7 billion in 2020, down from a profit of $15.8 billion during full-year 2019.

Despite the record drop in profits, Shell maintains it is coming out of 2020 with a strong balance sheet. 

“We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers, and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy,” said Shell CEO Ben van Beurden.

Shell restructuring plan

The results come in the firm’s backdrop unveiling its net-zero emission strategy amid continued projection of a profitable future. Shell has lined up a massive restructuring in line with reducing greenhouse gas emissions. The plan will lead to about 9,000 job losses.

Through the restructuring, the company will be saving between $2-2.5bn annually by 2022. 

As rivals in the sector, Shell was looking forward to a bright Q4 2020 after most economies lifted lockdown measures in the previous quarter. However, the Covid-19 second wave dampened Shell’s future outlook. 

Other major oil and gas industry players like ExxonMobil have warned of a turbulent 2020. The company reported a loss of $20.1 billion during Q4 2020. At the same time, U.K.-based BP also posted a first full-year net loss in a decade.

Overall, oil prices have improved in 2021 as WTI global benchmark is climbing to its highest level in almost a year.

Related video: Shell has been battered by tumbling demand for energy amid the global health crisis

Shell’s profits have sunk to a 20-year low.

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.