Anglo-Dutch major Shell saw its second quarter profit fall by 25 per cent as a weak global economy, trade tensions and an uncertain oil market took its toll across its portfolio of energy sectors.
Shell’s second quarter profit plunged to $2.9 billion (Dh10.6bn), compared with $6bn for the same period last year. Earnings attributable to shareholders stood at $3bn, a 24 per cent decline on last year, which the company said was due to "lower realised oil, gas and LNG (liquefied natural gas) prices" - in which Shell is the world’s largest trader. The company also took a hit from lower realised chemicals and refining margins, as well as higher provisions.
Chief executive Ben van Beurden said the company’s cash flow remained strong in spite of earnings volatility as well as a challenging macroeconomic environment in refining, chemicals and gas. Cash flow for the second quarter gained 4 per cent to reach $11bn.
"The resilience of our upstream and customer-facing businesses and their ability to generate cash support the delivery of our 2020 outlook, which remains unchanged,” Mr van Beurden said in a statement.
Shell, which accounts for a quarter of all trade in LNG, missed even the lowest analyst expectations for the second quarter. The company's earnings miss was the biggest since 2016, according to Bloomberg estimates.
Gas has been a big earner for the major but it performed poorly, declining 25 per cent to reach $1.7bn in the second quarter, largely due to an oversupply in the segment, which resulted in overall bearishness for gas prices.
Shell’s peers have also seen their financial performance take a hit, with Italian energy major Eni reporting a 27 per cent decline in second-quarter earnings last week.
Eni, which struck a gas bonanza following the discovery of large concessions in the Eastern Mediterranean and which has positioned itself as an active player in the Middle East, said it was impacted by the vagaries of the oil markets, as well as a higher tax rate.
The Italian firm’s adjusted profit for the quarter fell to €562 million (Dh2.2bn), well below analysts’ expectations of €950m.
