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Shell celebrates ‘momentous’ 2021 results with $8.5 billion share buyback and dividend raise

© Supplied by Shell/Ed RobinsonShell results 2021
Shell CEO Ben van Beurden

Shell (LON:SHEL) has hailed a “momentous year” in 2021, making dual announcements to keep shareholders happy as profits surged for the energy giant.

The company has announced an $8.5 billion share buyback scheme, which will take place in the first half of 2022.

Shell also intends to increase its dividend per share by around 4% for the first quarter of 2022.

“2021 was a momentous year for Shell”, said chief executive Ben van Beurden.

“We launched our Powering Progress strategy and simplified our share structure and organisation. Progress made in 2021 will enable us to be bolder and move faster.

“We have a compelling strategy, with customers at its core. We have ambitious plans to generate shareholder value, to decarbonise our products and to provide energy to our customers while respecting nature.”

Shell shares are up nearly 1.4% to nearly £19.60 as of 8.40am.

The buyback scheme is inclusive of the $5.5 billion already earmarked for the programme through the sale of Shell assets in the Permian basin to ConocoPhillips.

Shell has been buying up shares and increasing its dividend in a bid to attract investors who are wary of the oil and gas sector in light of recent downturns.

Price crisis and ‘windfall tax’

Mr van Beurden hailed a “very strong financial performance” in the Shell 2021 results, which saw the oil giant report pre-tax profits of nearly $30 billion, reversing losses of almost $27 billion for 2020, as healthier oil and gas prices returned.

It comes as activists have called for a windfall tax on the profits of North Sea operators as the UK is gripped by an energy price crisis.

Activist group Greenpeace said it comes while families are “left with cold homes and astronomic bills”.

Head of climate Kate Blagojevic said Chancellor Rishi Sunak “should tax the bloated profits of fossil fuel giants and use the money to help cash-strapped households”.

Revenues, meanwhile jumped from $180.5bn in 2020 to $261.5bn and Shell managed to slash net debt by $23bn during the year to $52.6bn.

Mr van Beurden said: “We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company.

“Today we are stepping up our distributions with the announcement of an $8.5 billion share buyback programme and we expect to increase our dividend per share by around 4% for Q1 2022.”

It’s the first set of results for the oil giant, which is no longer Royal or Dutch, since having approved a decision in December to move its headquarters to London from the Netherlands.

Earlier this week, Shell started trading on a single line of ordinary shares as part of its simplified process.

In January, the firm reached a market capitalisation of £133 billion, overtaking AstraZeneca as the company with the largest market value on the FTSE 100 index.

Analysis

Stuart Lamont, investment manager at Brewin Dolphin, said: “Shareholders will be mindful of the transition period ahead for Shell, as it looks to reduce its carbon emissions and reach net zero.

“However, for now, the company is in good shape, with the shares buoyed by a combination of its share buyback programme, dividend, and the commodity price.”

Hargreaves Lansdown’s Steve Clayton said “the underlying picture is clear; Shell is generating huge amounts of cash currently and debt levels have dropped”.

He added: “Some will argue that Shell could return even more to investors, given today’s announcement of an increase in future quarterly dividends still leaves the payment barely more than half its pre-pandemic level.

“But even at this level the shares offer a prospective yield of almost 4% and we doubt the board will feel they need to offer more. The market seemed to think so too, with the shares rising a couple of percent in early trading.”

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