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Total and Shell reported growth in profits


Total and Royal Dutch Shell reported increased profits in the first quarter: after a tough year due to the pandemic, the two largest oil companies in Europe got a boost from a rebound in energy consumption and higher prices.

The French group’s adjusted net income rose 69% year-over-year to $ 3 billion, while its Anglo-Dutch rival rose 13% to $ 3.2 billion.

The financial position of the oil industry is starting to improve after the chaos wrought by the coronavirus crisis, which forced energy companies to cut capital spending and cut costs.

In recent months, Brent, the international benchmark for oil, has largely held above $ 60 a barrel as major global producers cut supply and demand rises.

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However, new outbreaks of coronavirus in large consumer countries like India are dampening recovery prospects. Total warned that the outlook for oil remains “volatile and subject to recovery in global demand.”

While Shell said it was able to capitalize on the strengthening of its chemicals business in the first quarter, Total is struggling. Both companies reported weaker performance in refining and marketing.

Dividend policy

The French group did not change its dividend policy throughout the crisis, maintaining dividends in the last quarter at 66 cents [евро]… At the same time, Shell and BP have cut payments and are now under pressure as shareholders demand the money back.

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Shell cut its dividend by two-thirds to 16 cents a year ago – the first cut since World War II – and has been trying to attract investors again since then. The company increased its payout in October to 16.65 cents and promised at the beginning of the year to raise its dividend by another 4% to 17.35 cents per share in the first quarter of 2021.

Shell CFO Jessica Uhl told the FT that “we do not expect further increases” in dividends this year.

European groups are looking to increase profits in order to invest in cleaner energy to achieve zero emissions in the future. However, in the coming years, the bulk of their income will come from oil and gas. Some investors have criticized Shell and Total, which will hold AGMs next month, as they think they won’t last long.

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Norwegian company Equinor, which also disclosed first-quarter results on Thursday, said its adjusted profit before tax rose to $ 5.5 billion from $ 2.1 billion in the same period last year.

Amid rising commodity prices and one-off income from the renewable energy division, the company decided to raise its dividend from 12 cents to 15 cents per share for the quarter.

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