🐢 Shell | The thing the turtles have

In this edition, we take a look at Shell. As usual, we will look at the financial statement and break down some charts.

Income Statement

Like its peers, 24Q1 has seen a stabilisation and reduction in global energy prices, resulting in a relatively reduced revenue and profit. Shell has seen a -16%^Y/Y decrease in its total revenue. Impressively, Shell has maintained their overall profit margin at 9.8%, resulting in a net profit of U$7.4B (down -16%^Y/Y ).

Integrated Gas: Shell produced a similar total of product (992Mboe/d) to 23Q1 (970Mboe/d). However, a lower realised price and trading volume resulted in a reduction in revenue.

Upstream: The production (1872Mboe/d) remained consistent with 23Q1 (1877Mboe/d). However, this segment suffered from unfavourable deferred tax movements and high write-offs. Inflation and deferred tax positions in Argentina resulted in an overall negative impact.

Marketing: Despite the sector name, this segment is the Mobility (EV charging and fuel transport), Lubricants, and “Sectors & Decarbonisation” (Special fuels and Low carbon energy solutions) businesses of Shell. This segment had lower operating expenses but suffered from higher tax charges.

Chemicals & Products: Similar to the other segments, the production (Mb/d) was similar to 23Q1 (1413Mb/d); lower prices resulted in a reduction in revenue.

Renewables & Energy: 23Q1 had favorable movements of U$1.8B due to the “fair value accounting of commodity derivates”, whereas 24Q1 only has a U$306M of “fair value accounting of commodity derivates”. The report isn’t clear on the rest of the difference.

Corporate: General corporate stuff, nothing too exciting here.

Cashflow Statement

Despite a reduction in net profit, Shell has continued to increase its cash reserves by U$1.2B to U$38.7B. 23Q4 (last period) saw a decrease in the cash reserves by U$4.2B (~10% of the reserve at the time); as such, it is likely they would be interested in getting this returning the money.

Highlights & Outlook

In the presentation material, Shell highlighted its involvement in the energy transition and how it plans to remain profitable as the world aims for net zero by 2050.

• Energy security: Investing ~U$40B over 2023-2025 into LNG growth

• Energy transition: Investing ~U$35B over 2023-2025 into the Downstream & Renewables sector, with U$10-15B of that going towards low-carbon energy solutions.

• Shareholder Returns: Increased dividend per share by 20% and completed U$13.2B of share buybacks over the last twelve months.

• Scope 1 and 2 emission: Aiming to reduce scope 1 and 2 emissions to 50% of the 2016 reference year by 2030. Currently, Shell reports a 31% reduction down to 57 Million tonnes CO2e / year of scope 1 and 2 emissions in their operational control.

Balance Sheet

Shell saw no reduction in equity, as the dividends and repurchase of shares were sufficiently offset by the comprehensive income for the quarter. Otherwise, like most stable companies, Shell doesn’t have much volatility in its balance sheet.

Cheers,

Connor

All data can be found on the Shell Investors website.