Oil giant Shell posts highest-ever annual profit of $40 billion

Oil giant Shell posts highest-ever annual profit of $40 billion

Shell said last month that extraordinary taxes imposed by the European Union and the United Kingdom after rising profits would cost the group about $2 billion.

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british oil giant Shell It posted its highest annual gain on Thursday, buoyed by rising fossil fuel prices and robust demand since Russia’s full-scale invasion of Ukraine last year.

Shell reported adjusted earnings of $39.9 billion for the full year 2022. This comfortably exceeds the $28.4 billion in 2008, which Shell said was the company’s previous annual record and is more than double the company’s earnings for the entire year. year 2021 of $19.29 billion.

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Analysts surveyed by Refinitiv expected full-year 2022 net earnings 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, expected to be completed by first quarter 2023 results, due to be released in early May, and a 15% increase in the dividend per share for the fourth trimester.

“It’s a great year for Shell and also a great year to look back on,” Shell CEO Wael Sawan told CNBC’s Steve Sedgwick in his first earnings interview since taking over on Jan. 1.

“I feel privileged to take on this role at such an important time in the company’s history. Looking forward, I believe we have a unique opportunity to be able to succeed as the winner in the energy transition. We have a portfolio that I believe is second to none,” Sawan said.

“My focus will be largely on performance and capital discipline,” he added.

The results follow in the footsteps of the historic annual profits of the US oil majors. exxonmobil Y Chevronand the largest oil and gas companies in the West are expected to earn combined profits of nearly $200 billion for the year, according to Refinitiv data.

The extraordinary scale of the industry’s profits has renewed criticism and prompted calls for a windfall tax on big oil.

Shell saying last month that he expected to take a $2 billion hit for the last three months of 2022 as a result of new taxes in the European Union and the United Kingdom

“Ultimately, tax is a matter for governments to decide. We of course participate and provide perspective, and the key perspective that we try to provide is context around the fact that companies like us that need to invest billions of dollars to support the energy transition requires a secure and stable investment climate,” Sawan said.

“For example, windfall taxes or price caps just erode confidence in the stability of that investment, so I am concerned about some of the moves that are being made,” he continued.

“I think a different approach needs to be taken, which is to really bring in investment capital at a time when we need to be able to embed energy security into the broader energy system here in Europe.”

Shares of the London-listed company rose 0.6% in early trading on Thursday.

‘Energy trilemma’

Shell said its cash capex outlook for 2023 is between $23 billion and $27 billion. Of that, Sawan said about a third, if not slightly more, would go to areas like renewable energy.

Shell, which aims to become a net zero emissions business by 2050, said adjusted earnings for its Energy and Renewable Solutions unit were $293 million for the last three months of 2022, down from $383 million. in the third trimester.

“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.

“Most of Shell’s investments remain tied to the fossil fuel business, because the company does not have a target to reduce its total CO2 emissions in this decade, as is required to get to Paris.”

In recent quarters, Big Oil executives have defended their rising profits, saying the major disruption to global energy markets due to the war in Ukraine has reaffirmed the importance of helping solve the “energy trilemma.”

According to a statement to investors from BP CEO Bernard Looney late last year, this refers to “secure, affordable, lower carbon energy.”

Climate advocates and activist shareholders have been highly critical.

“For Shell’s annual profits to more than double last year, while millions of people have been faced with the impossible choice between putting food on the table and heating their homes, is simply staggering,” said Sana Yusuf, Amigos climate activist. from the earth.

“People can see the injustice of paying eye-popping energy costs while big oil and gas companies make billions,” Yusuf said.

US oil giant Exxon Mobil on Tuesday reported a profit of $56 billion by 2022, marking an all-time high for the Western oil industry, while Chevron on Friday aware a record profit of $36.5 billion for last year.

biggest british oil tanker PA is scheduled to report full-year earnings on February 7, with France Total Energies scheduled to follow on February 8.

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