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Royal Dutch Shell joins the league of oil companies to have reported losses in Q3

Michael Harris
  • November 1st, 08:29
  • Last Updated: November 1st, 08:31
  • Royal Dutch Shell reports a 15% decline in net profit in the third quarter of 2019.
  • Net profit in Q3 missed the analysts' forecast but was printed better than the figure for Q2.
  • The share prices dropped by 2% initially and settled around 1% down on Thursday.
  • Reduced oil prices and global demand highlighted as the reasons for the negative outlook.

The world-renowned Dutch-British oil and gas company, Royal Dutch Shell, announced its earnings report for the third quarter on Thursday. Having reported a sharp decline of 15% in net profit, Shell’s stock was seen trading 1% lower (year-over-year) as of Thursday.

The Chief Executive, Ben van Beurden of Royal Dutch Shell cited chemicals’ margins and dropping prices in the energy sector as the reasons for lower-than-expected net profit.

“This quarter we continued to deliver strong cash flow and earnings, despite sustained lower oil and gas prices, and chemicals margins”.

Shell’s Net Profit In Q3 Misses Analysts Forecast

The oil giant had noted $5.624 billion of net profit in the third quarter of 2018. The figure for Q3 of 2019, however, has come out at $4.767 billion, that has, nonetheless, shown improvement when compared to $3.462 billion net profit reported in the second quarter.

While Shell missed Refinitiv’s estimate of $6.468 billion in net profit by a significant margin, it beat the company’s own analysts’ forecast of $3.912 billion in net profit in the third quarter. The initial market response to the release of earnings report was as much as a 2% drop in the share prices.

Following the Q3 report, Shell has announced the next round of share buyback program, considering $2.75 billion of maximum aggregate for a period till January 27th, 2020. It was further added that the oil company is committed to buying back $25 billion worth of shares in an attempt to minimize the net debt. The target accomplished so far was reported at $12 billion of shares. CEO Beurden remarked that the dawdling macroeconomic scenario at large is likely to stir up the uncertainty in terms of hitting the $25 billion target in the upcoming year.

Other Noticeable Losses In Energy Sector

Officials from Shell blamed the drop in oil prices and reduced global demand for the negative outlook in Shell’s Q3 earnings report. Brent Crude (international benchmark) has printed a 20% decline since it made a high in April 2019, while U.S West Texas Intermediates (WTI) has been reported to have lost 15% in the same time period. The prices for both the benchmarks, however, were seen trading 0.2% ($60.75) and 0.1% ($55.14) higher respectively, as of Thursday.

Royal Dutch Shell isn’t the only business in energy sector that has undergone losses in the third quarter. British Petroleum (BP) has also reported a sharp decline of 41% in net profit at the start of this week. Exxon Mobil, and Chevron, two of the toughest American competitors of Shell are going to be announcing their earnings report later on Friday.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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