Profits at Shell fell by nearly a third in the last quarter as the energy company was hit by a fall in earnings from oil and gas.
Shell reported on Thursday morning that its adjusted earnings dropped to $4.26bn in the second quarter of this year, 32% less than the $6.29bn it made in April-June 2024 when energy prices were higher. This beat City forecasts of a larger drop in profits to $3.7bn.
Shell attributed the drop to “lower trading and optimisation margins” as well as lower prices for oil and gas. At the end of June, Brent crude was trading below $68 a barrel, compared with more than $86 a barrel a year earlier.
Despite the fall in profits and a rise in debt, Shell is continuing to pump money back to its investors through share buyback schemes. It announced it would spend $3.5bn buying back shares in the third quarter of the year.
Shell’s chief executive, Wael Sawan, said the company had delivered a strong operational performance in “a less favourable macro environment”.
He said: “Our continued focus on performance, discipline and simplification helped deliver $3.9bn of structural cost reductions since 2022, with the majority delivered through non-portfolio actions. This focus enables us to commence another $3.5bn of buybacks for the next three months, the 15th consecutive quarter of at least $3bn in buybacks.”
Shell’s net debt increased to $43.21bn in the second quarter, up from $38.3bn a year earlier.
Derren Nathan, the head of equity research at Hargreaves Lansdown, said a recent rise in oil prices should help Shell’s financial performance improve in the third quarter of the year.
“Shell’s second-quarter earnings hit a bit of an oil patch, with lower commodity prices, a weaker trading environment and unplanned downtime at its chemical plants all playing their part,” Nathan said.
Shares in Shell rose 2.5% in early trading, to £27.45.
Shell’s profits continue to anger environmental campaigners, after the company last year rolled back decarbonisation targets.
Robin Wells, the director of Fossil Free London, a campaign group that protested outside Shell’s headquarters on Wednesday night, said “We are now in a new normal of record-breaking heat, created by corporations like Shell. This will mean devastation and mass loss of human life. Climate scientists have warned us that this new normal will spell the end of human civilisation by 2100. It’s time for destruction to stop raising billions in profit.”
