Shell reports strong performance as oil and gas prices recover
Chemical

Shell reports strong performance as oil and gas prices recover

Net debt was $52.6 billion at the end of the Q4 2021,, compared with $57.5 billion at the end of the third quarter 2021

  • By ICN Bureau | February 03, 2022

Shell net profit in 2021 stood at $20.1 billion after a loss after tax of $21.7 billion in 2020, as oil and gas prices soared on recovering demand and geopolitical unrest.

"2021 was a momentous year for Shell,” Ben van Beurden, Chief Executive Officer, Shell plc, said adding that “we are stepping up our distributions with the announcement of an $8.5 billion share buyback programme.”

According to the press release, Shell’s adjusted earnings for 2021 jumped to $19.3bn from $4.8bn in 2020. Earning for the Q42021 were $6.4bn, up from $393mn during the corresponding period a year earlier and $2.9bn in the fourth quarter of 2019.

Cash flow from operating activities for the fourth quarter 2021 was $8.2 billion, which included negative working capital movements of $3.0 billion and negative impacts of $2.7 billion related to commodity derivatives. Cash flow from investing activities for the quarter was an inflow of $2.6 billion, mainly driven by proceeds from sale of property, plant and equipment and businesses of $8.8 billion, mostly due to the Permian sale in the USA, partly offset by capital expenditure of $6.2 billion.

“We launched our Powering Progress strategy and simplified our share structure and organisation. Progress made in 2021 will enable us to be bolder and move faster. We have a compelling strategy, with customers at its core.  We have ambitious plans to generate shareholder value, to decarbonise our products and to provide energy to our customers while respecting nature.

We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company,” Beurden said.

At the end of the Q4 2021, net debt was $52.6 billion, compared with $57.5 billion at the end of the third quarter 2021, mainly driven by free cash flow generation in the quarter, which included divestment proceeds from the Permian sale in the USA. This was partly offset by dividends and share buybacks. Gearing was 23.1% at the end of the fourth quarter 2021, compared with 25.6% at the end of the third quarter 2021, mainly driven by net debt reduction and higher earnings.

The earnings from the chemicals segment in Q4 were a loss of $119 million. “This included post-tax impairment charges, which are part of identified items (see Reference A). Adjusted earnings were a loss of $42 million,” the company said.

For chemicals, cash flow from operating activities for the quarter was $383 million, primarily driven by Adjusted EBITDA and non-cash cost-of-sales adjustments, as well as positive working capital movements, and the timing impact of dividends from Joint Ventures and Associates.

Compared with the third quarter 2021, chemicals Adjusted Earnings reflected lower base chemicals margins, Hurricane Ida recovery efforts, unplanned maintenance and lower income from Joint Ventures and Associates. “Chemicals manufacturing plant utilisation was 75% compared with 78% in the third quarter 2021, due to Hurricane Ida recovery efforts, unplanned maintenance and extended turnarounds.

Full year segment earnings were $1,390 million. This included post-tax impairment charges of $301 million and legal provisions of $37 million. These net losses are part of identified items (see Reference A). Adjusted earnings were $1,753 million.

Cash flow from operating activities for the full year 2021 was $2,680 million, primarily driven by Adjusted EBITDA and non-cash cost-of-sales adjustments, partly offset by negative working capital movements.

Compared with the full year 2020, Chemicals Adjusted Earnings reflected higher realised margins in base chemicals and intermediates from a stronger price environment, partly offset by the impact of Hurricane Ida.

Chemicals manufacturing plant utilisation was 78% compared with 80% for the full year 2020 due to the impact of Hurricane Ida,” the company said.

Register Now to Attend NextGen Chemicals & Petrochemicals Summit 2024, 11-12 July 2024, Mumbai

Other Related stories

Startups

Petrochemical

Energy

Digitization