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Shell raises dividends, profits exceed expectations



(Bloomberg)-

Royal Dutch Shell Plc plans to raise dividends and ensure steady growth to attract investor dissatisfaction only six months after cutting dividends.

In a painful year for major oil companies, the Anglo-Dutch energy giant has provided investors with some good news. It also reported higher-than-expected profits in the third quarter, reduced net debt and strong cash flow, although most of its divisions continue to be hit by the coronavirus.

Shell said in a statement on Thursday that the company’s dividend for the quarter will increase by 4% to 16.65 cents per share and will increase every year thereafter. However, after the announcement of significant cuts in April, spending was only slightly more than a third of its 201

9 level.

CEO Ben van Beurden said in an interview on Bloomberg Television: “The board is confident that we can increase our dividend by 4% this year and grow by a similar percentage in the next few years.” He Said that Shell is proving that this is “a compelling investment.”

As of 8:55 am London time, the company’s share price rose 1.9% to 883 pence, but it is still down about 60% this year.

With the continued downturn in the oil industry, Shell provides a bright spot. After the pandemic ended the global economic boom, the oil industry is suffering from a historical decline in demand. Italy’s Eni SpA and Austria’s OMV AG reported losses in the third quarter, while Repsol SA made a slight profit.

Shell’s closest peer, BP Plc, posted amazing profits, but there are few signs that shareholder returns will improve after cutting their own spending in August. Van Beurden promised a steady increase in cash returns, but BP has fixed its dividend and said it will take at least a year to resume stock buybacks.

Shell’s adjusted net income for the third quarter was US$955 million, a decrease of 80% from the same period last year, but even higher than the analyst’s highest estimate. Falling oil and LNG prices and weak refining operations hit earnings, but this was partially offset by reduced operating expenses and good marketing profits.

The company’s other financial indicators also provide some comfort to investors. The gearing ratio (Gearing) dropped to 31.4% from 32.7% in the second quarter. Net debt fell to US$73.5 billion, and Shell promised to further increase shareholder distribution once this figure reaches US$65 billion.

Royal Bank of Canada analyst Biraj Borkhataria said in a report that Shell has achieved a series of strong performance, which puts the company in a “leading position” among investors.

(Updated to the same level comparison in the sixth paragraph.)

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