Second quarter 2014 results - July 31, 2014
On Thursday, July 31, 2014 Royal Dutch Shell plc released its second quarter results and second 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.
CEO video comment
Second quarter 2014 results CEO video comment
Hello, I am Ben van Beurden, the CEO of Royal Dutch Shell.
Today I’d like to give you an overview of our second quarter 2014 results
and update you on the progress on our strategic priorities.
Firstly on the results.
Second quarter earnings, excluding identified items, were $6.1 billion, a 33% increase in CCS earnings per share versus the same quarter last year.
Our financial performance for the second quarter of 2014 was more robust than year-ago levels,
but there’s no complacency here, we want to see a more competitive performance from Shell.
We are making progress with the priorities that I set out at the start of 2014 to balance growth and returns by focusing on better financial performance, enhanced capital efficiency,
and continued strong project delivery.
In North America resources plays where we have taken some impairments today we see growth potential in Western Canada gas, linked to LNG and in liquids rich shales in Western Canada and the Permian.
Shell’s Lower 48 dry gas positions, where we have established production and further exploration potential, remain under review and there could potentially be further asset sales there.
We are taking firm actions to improve Shell’s capital efficiency by selling selected assets and making tougher project decisions.
We have completed some $8 billion of asset sales so far in 2014 and this is good progress against plans for $15 billion of asset sales in 2014 and 2015 combined.
On the portfolio growth side we have continued to ramp up production at Mars B in the Gulf of Mexico which averaged nearly 40,000 boe per day in the quarter and our exploration programme is delivering, with new finds in the Gulf of Mexico and Malaysia.
We aim to grow cash flow through the cycle and deliver competitive shareholder returns.
Dividends are Shell’s main route for returning cash to shareholders and we have distributed more than $11 billion of dividends in the last 12 months and we are expecting that shareholder distributions buybacks and dividends should exceed $30 billion over 2014 and 2015 combined.
All of this underlines the company’s recent improved performance and future potential.
- Royal Dutch Shell’s second quarter 2014 earnings, on a current cost of supplies (CCS) basis (see Note 2), were $5.1 billion compared with $2.4 billion for the same quarter a year ago. Earnings included an identified net charge of $1.0 billion after tax, mainly reflecting impairments which were partly offset by divestment gains (see page 6).
- Second quarter 2014 CCS earnings excluding identified items (see page 6) were $6.1 billion compared with $4.6 billion for the second quarter 2013, an increase of 33%.
- Compared with the second quarter 2013, CCS earnings excluding identified items benefited from higher liquids production volumes and prices, the impact of the strengthening Australian dollar on a deferred tax liability, and higher contributions from Manufacturing. These items were partly offset by increased depreciation, higher costs, and the phasing of a dividend from an LNG venture into the third quarter of 2014.
- Basic CCS earnings per share excluding identified items increased by 33% versus the same quarter last year.
- Cash flow from operating activities for the second quarter 2014 was $8.6 billion, compared with $12.4 billion for the same quarter last year. Excluding working capital movements, cash flow from operating activities for the second quarter 2014 was $11.0 billion, compared with $8.4 billion for the second quarter 2013.
- Capital investment for the second quarter 2014 was $8.5 billion. Net capital investment (see Note 2) for the second quarter 2014 was $1.1 billion, compared with $10.9 billion for the same period a year ago.
- Total dividends distributed in the quarter were $3.0 billion, of which $1.0 billion were settled under the Scrip Dividend Programme. During the second quarter some 8.6 million A shares were bought back for cancellation for a consideration of $0.3 billion. Shell has now cancelled the Scrip Dividend Programme and scrip dividends will not be offered for the second quarter 2014 dividend.
- Gearing at the end of the second quarter 2014 was 13.4%.
- A second 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 second quarter 2013.
“We are making progress with the priorities I set out at the start of 2014: to balance growth and returns by focusing on better financial performance, enhanced capital efficiency, and continued strong project delivery.
Shell’s strategy is founded on technological expertise, disciplined capital investment, integrated operations, and large scale. This is underpinned by an unrelenting focus on safety. We aim to grow cash flow through the cycle and deliver competitive shareholder returns.
I am determined to get a tighter grip on business performance management in the company, and improve the balance between growth and returns.
Our financial performance for the second quarter of 2014 was more robust than year-ago levels but I want to see stronger, more competitive results right across the company, particularly in Oil Products and North America resources plays. Improvement of financial performance in these two parts of the business will take time, but I see early momentum, which we must maintain.
Sharper accountability in the company means that we are targeting our growth investment more effectively, focusing on areas of the business where performance improvement is most needed, and driving asset sales in non-strategic positions.
The impairments we have announced today in Upstream Americas reflect the restructuring of Shell’s resources plays portfolio. We see attractive growth opportunities there such as natural gas integration and liquids-rich shales.
We are taking firm actions to improve Shell’s capital efficiency by selling selected assets and making tougher project decisions. We have completed some $8 billion of asset sales so far in 2014. This represents good progress towards our targets to focus the portfolio, and to maintain the financial framework in robust health.
We’ve continued to ramp up production at Mars B in the Gulf of Mexico – part of Shell’s industry-leading deep-water portfolio – and our exploration programme is delivering, with new finds in the Gulf of Mexico and Malaysia.
Our dividend for the second quarter of 2014 is 4% up from year-ago levels. We are expecting some $7 – $8 billion of share buybacks for 2014 and 2015 combined, of which $1.6 billion were completed in the first half of this year. These expected buybacks and dividend distributions are expected to exceed $30 billion over the two-year period. All of this underlines the company’s recent improved performance and future potential.”
Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc, hosted audio webcasts of the second quarter 2014 results on Thursday July 31.