Royal Dutch Shell reported a small drop in first quarter profit to $5.4bn (€4.8bn), but still easily beat forecasts, helped by stronger trading and liquefied natural gas earnings.
Shell’s results outshone those of rivals Exxon Mobil, Chevron and BP which all saw sharp declines in profits in the first three months of the year as a result of lower refining margins and weaker crude and gas prices.
Shell’s shares rose 2.5%. Its dividend was unchanged at $0.47 a share.
The strong results build on a sharp rise in profits last year to $21.4bn, their highest since 2014, which beat those of larger rival Exxon and followed deep cost cuts in the wake of the 2014 oil price downturn.
Still, cash generation, which the Anglo-Dutch company has flagged as a key measure of its growth in the past, sagged 9% to $8.6bn as a result of one-off charges.
Free cash flow - cash available to pay for dividends and share buybacks — dropped to $4bn from $16.7bn in the previous quarter and $5.2bn a year earlier.
Shell has targeted free cash flow generation of $25bn to $30bn a year between 2019 and 2021.
In a sign of confidence, Shell, the world’s biggest dividend payer at $16bn a year, accelerated its $25bn share repurchasing scheme promised following the acquisition of BG Group in 2016.
By April 29 it said it had repurchased $6.75bn.
“The market may not yet fully appreciate the progress that Shell has made, but the resiliency of the company’s cash cycle is being demonstrated. In our view, the track record has been re-established,” said Jefferies analyst Jason Gammel.
Net income attributable to shareholders, based on current cost of supplies and excluding identified items, fell 2%, $5.4bn in the first quarter from a year earlier.
That topped a profit forecast of $4.54bn, according to a company-provided survey of analysts.
“Shell has made a strong start to 2019,” chief executive officer Ben van Beurden said.
“Our integrated value chain enabled our Downstream business to deliver robust results despite challenging market conditions,” he said.
The profit decline was a result of lower chemicals and refining margins, lower oil prices and lower tax credits, Shell said.
Those were offset by stronger contributions from trading as well as increased LNG and gas prices compared with the first quarter of 2018.