First quarter 2014 results - April 30, 2014
On Wednesday, April 30, 2014 Royal Dutch Shell plc released its first quarter results and first quarter interim dividend announcement for 2014. On this page a summarised overview of the results and links to the full set of results documents and webcast.
CFO video comment
First quarter 2014 results CFO video comment
Hello, I am Simon Henry, the Chief Financial Officer of Royal Dutch Shell.
Today we announced our quarterly financial results.
Let me give you the highlights.
Our first quarter 2014 earnings were $7.3 billion on a clean Current Cost of Supplies basis.
The earnings per share decreased by 2% from first quarter 2013.
Our Cash flow generated was around $14 billion.
On a Q1 to Q1 basis we saw a decline in Downstream earnings and broadly flat Upstream results. These are more robust results from Shell.
However, as we saw in 2013, there is high volatility in the macro-environment,
and high volatility in our quarterly results.
Our strategy and financial framework have not changed.
We aim to grow our dividends sustainably through the business cycle, driven by growing cash generation. All at competitive returns.
The priorities we set out at the start of this year have not changed. There is no complacency.
We still have much to do to improve our current results.
This means focusing on better financial performance, on enhanced capital efficiency which includes an increase in the asset sales programme, and continuing strong project delivery.
We have taken an $2.6 billion impairment today, in Downstream, that reflects Shell’s
updated views on the outlook for refining margins, where there are substantial pressures on the industry.This impairment represents about 14% of the fixed assets in our total refining business.
Upstream underlying earnings were $5.7 billion, essentially unchanged from year ago levels.
Our Upstream results included a record result from the Integrated Gas business
which showed an 30% increase year-over-year, and as well we saw strong results from gas trading.
Downstream earnings were $1.6 billion, 15% lower than year-ago levels, as industry margins declined.
We have added new opportunities during this quarter, we started up new production,
we announced further asset sales.
This is all part of positioning the company for profitable growth for the future.
We completed the Repsol LNG acquisition, made new gas discoveries in Asia Pacific,
and we added new exploration acreage world-wide.
We entered FEED on a series of new projects, that includes the LNG opportunity in Canada,
the deep water new hub development at Appomatox in the Gulf of Mexico and the Peterhead CCS project in the United Kingdom.
We announced divestments of businesses in Australia, Italy and the USA.
Dividends are Shell’s main route for returning cash to shareholders, and we are announcing
a 4% increase in dividend for Q1 today.
We have distributed more than $11 billion of dividends in the last 12 months, and completed some $6 billion of share buy backs.
All of this underlines our commitment to shareholder returns.
- Royal Dutch Shell’s first quarter 2014 earnings, on a current cost of supplies (CCS) basis (see Note 2), were $4.5 billion compared with $8.0 billion for the first quarter 2013.
- First quarter 2014 CCS earnings included an identified net charge of $2.9 billion after tax, mainly reflecting impairments related to refineries in Asia and Europe (see page 6).
- First quarter 2014 CCS earnings excluding identified items (see page 6) were $7.3 billion compared with $7.5 billion for the first quarter 2013, a decrease of 3%.
- Compared with the first quarter 2013, Upstream earnings excluding identified items were supported by stronger Integrated Gas results as well as higher gas realisations and gas trading results. This was offset by the impact of exploration well write-offs, and higher costs and depreciation. Downstream earnings excluding identified items were impacted by lower industry refining margins and trading results.
- Basic CCS earnings per share excluding identified items for the first quarter 2014 decreased by 2% versus the same quarter a year ago.
- Cash flow from operating activities for the first quarter 2014 was $14.0 billion. Excluding working capital movements, cash flow from operating activities for the first quarter 2014 was $13.1 billion.
- Capital investment for the first quarter 2014 was $10.7 billion, including $2.0 billion related to the acquisition of Repsol’s LNG business. Net capital investment (see Note 2) for the quarter was $10.1 billion.
- Total dividends distributed in the quarter were some $2.8 billion, of which $1.3 billion were settled under the Scrip Dividend Programme. During the first quarter some 32.4 million shares were bought back for cancellation for a consideration of some $1.2 billion.
- Gearing at the end of the first quarter 2014 was 15.6%.
- A first quarter 2014 dividend has been announced of $0.47 per ordinary share and $0.94 per American Depositary Share (“ADS”), an increase of 4% compared with the first quarter 2013.
“Shell’s profits enable the company to pay competitive dividends to shareholders and to finance new investments in oil and gas. Our long-term strategy is sound.
Our first quarter 2014 results reflect more robust levels of profitability. However, as we saw in 2013, we are in an industry where high volatility remains, both in the macro-environment and in our quarterly results.
The priorities I set out at the start of 2014 have not changed.
I am determined to improve our competitiveness, and to adapt the company to respond to changes in the industry landscape, particularly in Oil Products and North America resources plays.
We are aiming to continue to balance growth and returns, by focusing sharply on our three key priorities – better financial performance, enhanced capital efficiency, including more selectivity on project choices and $15 billion of divestments in 2014-15, and continuing strong project delivery.
Our investment strategy is delivering where it matters - at the bottom line. The first quarter of 2014 has seen new, profitable production from the deep-water Gulf of Mexico and Iraq, together with new LNG from our acquisition of Repsol’s portfolio.
We are making hard choices on Shell’s assets and options, to improve capital efficiency, in both Upstream and Downstream. The divestments underway in Downstream in four countries are part of Shell’s drive to improve our competitive position. Downstream has the potential to average 10-12% ROACE, more than double current levels, and to deliver around $10 billion of annual cash flow. I am determined to improve our performance in this business.
The impairments we have announced today in Downstream reflect Shell’s updated views on the outlook for refining margins. There are substantial pressures on the industry from excess capacity, changing product demand, and new oil supplies from liquids-rich shales.
The 4% dividend increase we have confirmed today for the first quarter 2014 underscores our delivery in recent years, and our confidence in the future potential.”
Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, hosted audio webcasts for media and analysts of the first quarter 2014 results on Wednesday April 30, 2014.