British energy giant Shell reported a 16% drop in full-year profit for 2024, citing weaker oil and gas prices, lower refining margins, and reduced demand. Despite missing analyst expectations, the company raised its shareholder dividend by 4% and launched a $3.5 billion share buyback program, leading to a modest increase in its stock price. The company posted adjusted earnings of $23.72 billion for 2024, down from $28.25 billion in the previous year.
Photo Credit: Visual Content team, Shell International Limited.
Analysts polled by LSEG had projected profits of $24.71 billion, while Vara Research expected $24.11 billion. Fourth-quarter earnings fell sharply to $3.66 billion, nearly half of the same period in 2023, underscoring the challenging market conditions. Speaking to the media, CEO Wael Sawan described 2024 as a “very strong year” despite the earnings decline, emphasizing that Shell remained committed to shareholder returns.
The company has been shifting focus towards its most profitable sectors oil, gas, and biofuels while scaling back investments in offshore wind and other renewable energy ventures. A $1 billion impairment related to a U.S. offshore wind project was among the key write-offs contributing to the profit decline. Shell’s financial position remained robust, with full-year cash flow from operating activities reaching $54.68 billion, exceeding market expectations.
Net debt at the end of 2024 was $4.7 billion lower than at the start of the year. The company also announced that capital expenditure in 2025 would be lower than the $21 billion spent in 2024, with further details to be provided at its capital markets day in March. The downturn in Shell’s earnings aligns with a broader industry trend. Oil and gas majors have seen profits retreat from the record highs of 2022, when energy prices surged following geopolitical tensions in Europe.
Brent crude oil futures averaged $80 per barrel in 2024, about $2 less than the previous year, reflecting weakened global demand. Meanwhile, a Scottish court overturned the U.K. government’s approval of Shell’s Rosebank and Jackdaw oil and gas projects, ruling that authorities had not adequately considered emissions from fossil fuel consumption. Environmental groups hailed the decision as a major victory, though Shell and its partner, Norway’s Equinor, indicated they would seek new approvals and continue working on the projects.
Looking ahead, Shell aims to sustain its profitability by streamlining operations and maintaining strong shareholder returns. The company’s latest share repurchase program marks the 13th consecutive quarter of at least $3 billion in buybacks. With industry peers such as ExxonMobil, Chevron, TotalEnergies, and BP set to report their earnings in the coming weeks, investors will closely watch how the energy sector navigates an evolving market landscape. – By MENA Newswire News Desk.