Oil giant Shell doubled its profits in the last quarter, thanks to rising energy prices since the start of the war in Ukraine, which is hitting households and businesses. Shell reported a record adjusted profit of $11.47bn (£9.4bn) for the latest quarter, up from $5.5bn in April-June 2021, as it benefited from higher realized prices, higher margins refining and the strongest gas and electricity trades. That crushes Shell’s record quarterly profit of $9.1 billion amassed in January-March and topped analysts’ forecasts. Shell says it delivered a “strong performance in a turbulent economic environment”. Shell CEO Ben van Beurden says: “With volatile energy markets and the continued need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments and companies. Consequently, we are using our financial strength to invest in the secure energy supplies the world needs today, taking real, bold steps to reduce carbon emissions and transforming our company for a low-carbon energy future. But the company will also inject more cash into investors, announcing a $6 billion share buyback program in the third quarter. Shell’s profits hit a new record high of $11.5 billion in the second quarter, more than double the same period last year. It is using the cash to launch a $6 billion share buyback — Emily Gosden (@emilygosden) July 28, 2022 And with gas prices at their highest level since the start of the war in Ukraine, the UK energy price cap could reach £3,850 a year in January. The benchmark wholesale gas prices for Britain and the Netherlands, ICIS NBP and ICIS TTF, have risen as Russia’s Gazprom cut flows through Nord Stream by 20%. The Dutch price has increased more than 10 times the average price in 2019. @ICISOfficial #NBP #TTF #natgas pic.twitter.com/aWbUEo97zk — Tom Marzec-Manser (@tmarzecmanser) July 27, 2022 The BFY Group, a utilities consultancy, is warning that the most vulnerable households, on pre-paid meters, could see energy bills of £500 for the month of January alone. Consumers were also warned that annual charges of more than £3,500 a year, or £300 a month, could become the norm “well into 2024”. This is really too bad. Still don’t think people realize how bad. Average energy bills of £300 a month until ‘well’ in 2024 are a disaster.https://t.co/lCbKfp7Lav — Rob Davies (@ByRobDavies) July 27, 2022 The grim forecasts came a day after MPs said millions of people would fall into “unmanageable debt” without more government help to pay the bills, after wholesale gas prices rose to near-record levels.
Also coming today
We find out today if the world’s largest economy is shrinking. when second quarter US GDP is released. Some analysts are predicting a fall in US economic activity for a second consecutive quarter, which would technically constitute a recession. European stock markets are expected to rise, despite the fact that the US central bank announced another sharp rise in interest rates last night. The Federal Reserve made its second straight hike of 0.75 percentage points as it embarks on its most aggressive monetary tightening cycle since 1981, but also suggested it could slow the pace of hikes if inflation eases.
THE AGENDA
9.30 am BST: Weekly UK economic and business data 10 am. BST: Eurozone Economic, Business and Consumer Confidence Report 13:00 BST: German inflation in July 1.30 p.m. BST: US Q2 GDP Report 1.30 p.m. BST: Weekly US unemployment
Updated at 07.29 BST Important events BETA filters Key Facts (2)Shell (4)US (2)UK (2)Ben van Beurden (1)Federal Reserve (1)
Shell’s profit margins triple
Shell’s profit margins almost tripled in the last quarter, to $28 per barrel of oil. That’s higher than the $10 per barrel refining margin in the first three months of this year. Shell says these higher refining margins reflect “the dislocation in product markets, particularly middle distillates.” Middle distillates are refined from crude oil and include heating oil, diesel and jet fuel. Fuel retailers have blamed profiteering from refiners for record suburban prices this year. And earlier this month, the UK’s competition watchdog raised concerns about the margins made by refiners. Here’s Reuters’ take on Shell’s results: Refining margins tripled in the quarter to $28 a barrel. They have weakened significantly in recent weeks amid signs of easing gasoline demand in the United States and Asia. Shell said its refinery utilization would increase to 90-98% in the third quarter, compared with 84% in the second quarter. Shell’s integrated gas division made an adjusted profit of $3.75 billion in the latest quarter, more than double the $1.6 billion in the second quarter of 2021. This is slightly down from the January-March quarter, when the segment – which includes liquefied natural gas (LNG) – posted $4bn. Shell says gas earnings this year were boosted by “higher realized prices and higher trading and optimization results”. Shell says it distributed a total of $7.4 billion to its shareholders in the last quarter. It will pay a dividend of $0.25 per share for the second quarter, which will be worth about $1.8 billion to its investors, I think. But it has also conducted an $8.5 billion share buyback program through 2022 (boosting its stock price) and will conduct a new $6 billion program this quarter. Given the current outlook for the energy sector, Shell says, shareholder distributions are expected to remain “above 30% of cash flow from operating activities”.
Introduction: Shell reports record profits of $11.5 billion
Good morning and welcome to our rolling coverage of business, the global economy and financial markets. Oil giant Shell doubled its profits in the last quarter, thanks to rising energy prices since the start of the war in Ukraine, which is hitting households and businesses. Shell reported a record adjusted profit of $11.47bn (£9.4bn) for the latest quarter, up from $5.5bn in April-June 2021, as it benefited from higher realized prices, higher margins refining and the strongest gas and electricity trades. That crushes Shell’s record quarterly profit of $9.1 billion amassed in January-March and topped analysts’ forecasts. Shell says it delivered a “strong performance in a turbulent economic environment”. Shell CEO Ben van Beurden says: “With volatile energy markets and the continued need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments and companies. Consequently, we are using our financial strength to invest in the secure energy supplies the world needs today, taking real, bold steps to reduce carbon emissions and transforming our company for a low-carbon energy future. But the company will also inject more cash into investors, announcing a $6 billion share buyback program in the third quarter. Shell’s profits hit a new record high of $11.5 billion in the second quarter, more than double the same period last year. It is using the cash to launch a $6 billion share buyback — Emily Gosden (@emilygosden) July 28, 2022 And with gas prices at their highest level since the start of the war in Ukraine, the UK energy price cap could reach £3,850 a year in January. The benchmark wholesale gas prices for Britain and the Netherlands, ICIS NBP and ICIS TTF, have risen as Russia’s Gazprom cut flows through Nord Stream by 20%. The Dutch price has increased more than 10 times the average price in 2019. @ICISOfficial #NBP #TTF #natgas pic.twitter.com/aWbUEo97zk — Tom Marzec-Manser (@tmarzecmanser) July 27, 2022 The BFY Group, a utilities consultancy, is warning that the most vulnerable households, on pre-paid meters, could see energy bills of £500 for the month of January alone. Consumers were also warned that annual charges of more than £3,500 a year, or £300 a month, could become the norm “well into 2024”. This is really too bad. Still don’t think people realize how bad. Average energy bills of £300 a month until ‘well’ in 2024 are a disaster.https://t.co/lCbKfp7Lav — Rob Davies (@ByRobDavies) July 27, 2022 The grim forecasts came a day after MPs said millions of people would fall into “unmanageable debt” without more government help to pay the bills, after wholesale gas prices rose to near-record levels.
Also coming today
We find out today if the world’s largest economy is shrinking. when second quarter US GDP is released. Some analysts are predicting a fall in US economic activity for a second consecutive quarter, which would technically constitute a recession. European stock markets are expected to rise, despite the fact that the US central bank announced another sharp rise in interest rates last night. The Federal Reserve made its second straight hike of 0.75 percentage points as it embarks on its most aggressive monetary tightening cycle since 1981, but also suggested it could slow the pace of hikes if inflation eases.
THE AGENDA
9.30 am BST: Weekly UK economic and business data 10 am. BST: Eurozone Economic, Business and Consumer Confidence Report 13:00 BST: German inflation in July 1.30 p.m. BST: US Q2 GDP Report 1.30 p.m. BST: Weekly US unemployment
Updated at 07.29 BST
