Shell’s third-quarter profits fall 15%, launches next phase of its share buyback program

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Oil giant Royal Dutch Shell reported a 15% fall in third-quarter net profit on Thursday, citing lower energy prices and chemicals margins.

Net income attributable to shareholders on a current cost of supplies (CCS) basis, used as a proxy for net profit, and excluding identified items, came in at $4.767 billion for the third quarter of 2019. That compared with a profit of $5.624 billion in the same quarter a year ago and $3.462 billion in the second quarter.

Analysts had expected third-quarter net income attributable to shareholders on a CCS basis, and excluding identified items, to come in at $6.468 billion, according to data from Refinitiv.

Separately, a company-provided analyst consensus had estimated a profit forecast of $3.912 billion.

Shares of Shell dipped almost 2% shortly after the opening bell.

Here are the key highlights:

  • Third-quarter net income on a CCS basis attributable to shareholders and excluding identified items came in at $4.767 billion.
  • That constituted a 15% drop in third-quarter profit when compared to the same period a year earlier.
  • Shell launched the next tranche of its share buyback program on Thursday, with a maximum aggregate consideration of $2.75 billion in the period up to and including January 27, 2020.

“This quarter we continued to deliver strong cash flow and earnings, despite sustained lower oil and gas prices, and chemicals margins,” Ben van Beurden, CEO of Royal Dutch Shell, said in a statement.

Shell also announced it had launched the next tranche of its share buyback program, with a maximum aggregate consideration of $2.75 billion in the period up to and including Jan. 27, 2020. The oil giant said it had bought back $12 billion in shares for cancellation.

“Our intention to buy back $25 billion in shares and reduce net debt remains unchanged. The prevailing weak macroeconomic conditions and challenging outlook inevitably create uncertainty about the pace of reducing gearing to 25% and completing the share buyback program within the 2020 timeframe.”

Shares of the Anglo-Dutch oil company are down more than 1% when compared to the same period in 2018, amid lower oil prices and concerns about sluggish global demand.

International benchmark Brent crude traded at $60.75 Thursday morning, up around 0.2%, while U.S. West Texas Intermediate (WTI) stood at $55.14, more than 0.1% higher.

Brent crude prices have fallen almost 20% since an April peak, while WTI prices are down more than 15% over the same period.

Earlier this week, BP reported a 41% fall in third-quarter net profits, citing lower upstream earnings, weaker crude futures and weather impacts.

U.S. rivals Chevron and Exxon Mobil are both set to report their latest quarterly results on Friday.

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