ROYAL DUTCH SHELL PLC PUBLISHES SECOND QUARTER 2021 PRESS RELEASE
The Hague, July 29, 2021
"We are stepping up our shareholder distributions today,
increasing dividends and starting share buybacks, while we continue
to invest for the future of energy. The quality of Shell’s
operational and financial delivery and strengthened balance sheet
have given the Board confidence to rebase the dividend per share
from Q2 2021 onwards to 24 US cents. We are also launching $2
billion of share buybacks, which is targeted to be completed by the
end of this year.
Total shareholder distributions for 2021 are expected to be
around the middle of the 20-30% range of CFFO from the previous
four quarters. Our progressive dividend policy to grow dividends
per share by 4% annually, subject to Board approval, remains
unchanged."
Royal Dutch Shell Chief Executive Officer, Ben van
Beurden
STEPPING UP DISTRIBUTIONS TO OUR
SHAREHOLDERS
- Another quarter of strong operational and financial delivery,
with $14.2 billion CFFO excl. WC and $5.5 billion Adj.
Earnings.
- Shell moves to the next phase of the capital allocation
framework, consistent with our Powering Progress strategy:
- Dividend rebased to 24 US cents per share, an increase of over
38% from Q1 2021; maintaining ~4% annual growth
- Share buybacks targeted at $2 billion in the second half of
2021
- Targeting AA credit metrics through the cycle; $65 billion net
debt milestone retired
- Disciplined cash capex: remains below $22 billion in 2021.
$ million |
Adj. Earnings1 |
Adj. EBITDA (CCS) |
CFFO ex. WC |
CFFO |
Cash capex |
Integrated Gas |
1,609 |
3,364 |
4,350 |
3,761 |
880 |
Upstream |
2,469 |
6,714 |
5,444 |
5,056 |
1,696 |
Oil Products |
1,299 |
2,608 |
3,365 |
2,213 |
882 |
Refining & Trading |
112 |
676 |
|
|
|
Marketing |
1,187 |
1,932 |
|
|
|
Chemicals |
670 |
1,036 |
1,225 |
1,133 |
895 |
Corporate |
(399) |
(101) |
(208) |
454 |
30 |
Less: Non-controlling interest |
115 |
115 |
|
|
|
RDS |
Q2 2021 |
5,534 |
13,507 |
14,176 |
12,617 |
4,383 |
Q1 2021 |
3,234 |
11,490 |
12,683 |
8,294 |
3,974 |
1 Income/(loss) attributable to shareholders for Q2 2021 is $3.4
billion. Reconciliation of non-GAAP measures can be found in the
unaudited results, available on www.shell.com/investors.
$ billion |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1 2021 |
Q2 2021 |
Divestment proceeds |
0.7 |
0.9 |
0.2 |
3.4 |
1.3 |
Free cash flow |
0.2 |
7.6 |
0.9 |
7.7 |
9.7 |
Net debt |
77.8 |
73.5 |
75.4 |
71.3 |
65.7 |
Q2 2021 FINANCIAL PERFORMANCE DRIVERS
INTEGRATED GAS, RENEWABLES AND ENERGY
SOLUTIONS
Key data |
Q1 2021 |
Q2 2021 |
Q3 2021 outlook |
Realised liquids price ($/bbl) |
55.74 |
58.97 |
— |
Realised gas price ($/mscf) |
5.41 |
6.32 |
— |
Production (kboe/d) |
967 |
938 |
870 - 920 |
LNG liquefaction volumes (MT) |
8.16 |
7.49 |
7.4 - 8.0 |
LNG sales volumes (MT) |
16.38 |
15.92 |
— |
- Adjusted Earnings and CFFO benefited from higher realised
prices, partly offset by lower trading and optimisation
margins.
- Trading and optimisation contributions to earnings were
significantly below average, mainly due to supply disruptions.
- Strong cash conversion, with CFFO excluding working capital of
$4.3 billion, benefiting from variation margin inflows in gas and
power trading.
- Q3 2021 production and LNG liquefaction volumes outlook is
impacted by maintenance activities.
UPSTREAM
Key data |
Q1 2021 |
Q2 2021 |
Q3 2021 outlook |
Realised liquids price ($/bbl) |
55.17 |
62.53 |
— |
Realised gas price ($/mscf) |
3.64 |
4.31 |
— |
Liquids production (kboe/d) |
1,579 |
1,558 |
— |
Gas production (mscf/d) |
5,126 |
4,082 |
— |
Total production (kboe/d) |
2,462 |
2,262 |
2,100 - 2,250 |
- Higher Adjusted Earnings than in Q1 2021, driven by higher
prices and a one-off release of a non-cash tax provision of
approximately $600 million.
- Continued strong cash conversion, with CFFO excluding working
capital of $5.4 billion.
- Production 8% below Q1 2021, driven by gas demand seasonality
and increased maintenance.
- Q3 2021 total production is expected to be impacted by lower
seasonal gas demand.
OIL PRODUCTS
Key data |
Q1 2021 |
Q2 2021 |
Q3 2021 outlook |
Sales volumes (kb/d) |
4,164 |
4,552 |
4,300 - 5,300 |
Refining & Trading sales volumes (kb/d) |
1,944 |
2,145 |
— |
Marketing sales volumes (kb/d) |
2,220 |
2,406 |
— |
Refinery utilisation (%) |
72 |
76 |
73 - 81 |
Global indicative refining margin ($/bbl) |
2.69 |
4.17 |
— |
- Strong Marketing earnings driven by improved retail unit
margins and volumes.
- Improved refining margins as well as higher intake and
utilisation than in Q1 2021.
- Trading and optimisation contributions to earnings were
average.
- Marginally higher operating expenses than in Q1 2021, driven by
recovery in volumes.
- Strong cash conversion with CFFO excluding working capital of
$3.4 billion.
CHEMICALS
Key data |
Q1 2021 |
Q2 2021 |
Q3 2021 outlook |
Sales volumes (kT) |
3,583 |
3,609 |
3,600 - 3,900 |
Manufacturing plant utilisation (%) |
79 |
82 |
77 - 85 |
- Higher base chemicals margins due to higher utilisation, partly
offset by lower intermediate margins resulting from lower spreads
in key value chains.
- Marginally higher operating expenses than in Q1 2021, driven by
maintenance catch-up.
- Strong cash conversion including timing impact of dividends
from joint ventures and associates.
CORPORATE
Key data |
Q1 2021 |
Q2 2021 |
Q3 2021 outlook |
Adjusted Earnings ($ million) |
(666) |
(399) |
(600) - (700) |
- Corporate segment Adjusted Earnings were a net expense of
around $400 million, impacted by favourable movements in deferred
tax positions.
- The latest full year estimate for Corporate Adjusted Earnings
is lowered to a net expense of $2,300 - 2,600 million. This
excludes the impact of currency exchange rate effects.
- Net debt decreased by $5.5 billion to $65.7 billion in Q2 2021
driven by higher cash flow from operations partly offset by a
working capital outflow.
UPCOMING INVESTOR EVENTS
28 October 2021 |
Third quarter 2021 results and dividends |
USEFUL LINKS
Q2 2021 results materials and share buyback announcement
Quarterly Databook Q2 2021
Dividend announcement Q2 2021
Q2 results webcast registration
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
This announcement includes certain measures that are calculated
and presented on the basis of methodologies other than in
accordance with generally accepted accounting principles (GAAP)
such as IFRS, including Adjusted Earnings, Adjusted EBITDA, CFFO
excluding working capital movements, Cash capital expenditure, free
cash flow, Divestment proceeds and Net debt. This information,
along with comparable GAAP measures, is useful to investors because
it provides a basis for measuring Royal Dutch Shell plc’s operating
performance and ability to retire debt and invest in new business
opportunities. Royal Dutch Shell plc’s management uses these
financial measures, along with the most directly comparable GAAP
financial measures, in evaluating the business performance.
This announcement contains a forward-looking Non-GAAP measure
for cash capital expenditure. We are unable to provide a
reconciliation of this forward-looking Non-GAAP measure to the most
comparable GAAP financial measure because certain information
needed to reconcile the Non-GAAP measure to the most comparable
GAAP financial measure is dependent on future events some of which
are outside the control of Shell, such as oil and gas prices,
interest rates and exchange rates. Moreover, estimating such GAAP
measure with the required precision necessary to provide a
meaningful reconciliation is extremely difficult and could not be
accomplished without unreasonable effort. Non-GAAP measures in
respect of future periods which cannot be reconciled to the most
comparable GAAP financial measure are estimated in a manner which
is consistent with the accounting policies applied in Royal Dutch
Shell plc’s consolidated financial statements.
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
The numbers presented throughout this announcement may not sum
precisely to the totals provided and percentages may not precisely
reflect the absolute figures, due to rounding.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate legal entities. In this
announcement “Shell”, “Shell Group” and “Group” are sometimes used
for convenience where references are made to Royal Dutch Shell plc
and its subsidiaries in general. Likewise, the words “we”, “us” and
“our” are also used to refer to Royal Dutch Shell plc and its
subsidiaries in general or to those who work for them. These terms
are also used where no useful purpose is served by identifying the
particular entity or entities. “Subsidiaries”, “Shell subsidiaries”
and “Shell companies” as used in this announcement refer to
entities over which Royal Dutch Shell plc either directly or
indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
“joint ventures” and “joint operations”, respectively. Entities
over which Shell has significant influence but neither control nor
joint control are referred to as “associates”. The term “Shell
interest” is used for convenience to indicate the direct and/or
indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all
third-party interest.
This announcement contains forward-looking statements (within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995) concerning the financial condition, results of operations and
businesses of Shell. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management’s current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Shell to
market risks and statements expressing management’s expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and
phrases such as “aim”, “ambition”, “anticipate”, “believe”,
“could”, “estimate”, “expect”, “goals”, “intend”, “may”,
“milestones”, “objectives”, “outlook”, “plan”, “probably”,
“project”, “risks”, “schedule”, “seek”, “should”, “target”, “will”
and similar terms and phrases. There are a number of factors that
could affect the future operations of Shell and could cause those
results to differ materially from those expressed in the
forward-looking statements included in this announcement, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell’s products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition;
(g) environmental and physical risks; (h) risks associated with the
identification of suitable potential acquisition properties and
targets, and successful negotiation and completion of such
transactions; (i) the risk of doing business in developing
countries and countries subject to international sanctions; (j)
legislative, fiscal and regulatory developments including
regulatory measures addressing climate change; (k) economic and
financial market conditions in various countries and regions; (l)
political risks, including the risks of expropriation and
renegotiation of the terms of contracts with governmental entities,
delays or advancements in the approval of projects and delays in
the reimbursement for shared costs; (m) risks associated with the
impact of pandemics, such as the COVID-19 (coronavirus) outbreak;
and (n) changes in trading conditions. No assurance is provided
that future dividend payments will match or exceed previous
dividend payments. All forward-looking statements contained in this
announcement are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section.
Readers should not place undue reliance on forward-looking
statements. Additional risk factors that may affect future results
are contained in Royal Dutch Shell plc’s Form 20-F for the year
ended December 31, 2020 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this announcement and
should be considered by the reader. Each forward-looking statement
speaks only as of the date of this announcement, July 29, 2021.
Neither Royal Dutch Shell plc nor any of its subsidiaries undertake
any obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or other
information. In light of these risks, results could differ
materially from those stated, implied or inferred from the
forward-looking statements contained in this announcement.
The content of websites referred to in this announcement does
not form part of this announcement.
We may have used certain terms, such as resources, in this
announcement that the United States Securities and Exchange
Commission (SEC) strictly prohibits us from including in our
filings with the SEC. Investors are urged to consider closely the
disclosure in our Form 20-F, File No 1-32575, available on the SEC
website www.sec.gov.
The financial information presented in this announcement does
not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006 (“the Act”). Statutory accounts
for the year ended December 31, 2020 were published in Shell’s
Annual Report and Accounts, a copy of which was delivered to the
Registrar of Companies for England and Wales, and in Shell’s
Form 20-F. The auditor’s report on those accounts was unqualified,
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying the report and
did not contain a statement under sections 498(2) or 498(3) of the
Act.
The information in this announcement does not constitute the
unaudited condensed consolidated interim financial statements which
are contained in Shell’s second quarter 2021 and half year
unaudited results available on www.shell.com/investors.
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