Fourth quarter 2017 results – February 1, 2018
Feb 1, 2018
On Thursday, February 1, 2018 at 07.00 GMT (08.00 CET and 02.00 EST) Royal Dutch Shell plc released its fourth quarter and full year results and fourth quarter interim dividend announcement for 2017.
On this page a summarised overview of the Royal Dutch Shell plc fourth quarter 2017 results and links to the full set of results documents and webcast.
Shell CEO Ben van Beurden on the fourth quarter 2017 results
Transcript of the CEO video comment:
Hello I‘m Ben van Beurden, the CEO of Royal Dutch Shell.
Today we announced our fourth quarter and full year 2017 financial results.
Let me update you on those and some of our key messages.
2017 was a year of strong financial performance for Shell.
The strong financial delivery came from each of our businesses in a volatile oil price environment.
Our 2017 current cost of supplies earnings, excluding identified items, were around $16 billion, that’s more than double 2016 earnings.
Cash flow from operations was some $36 billion, and free cash flow was around $28 billion all at an average Brent price for the year of $54 per barrel.
Now let me take you through some of the Q4 results.
Shell’s current cost of supplies earnings excluding identified items in the fourth quarter were $4.3 billion.
That’s $2.5 billion more than in the fourth quarter of 2016.
And this translates into an increase in earnings per share of more than 130%.
Compared to Q4 2016 we saw higher earnings again in all business segments.
Cash flow from operations was around $7.3 billion, or $8.4 billion if you exclude working capital movements.
During Q4 2017 we completed some large divestments: the sale of a package of UK North Sea assets, our Gabon onshore assets and we sold our shareholding in Woodside.
So now, with around $24 billion of divestments completed, and more than $6 billion announced or in advanced progress, we are close to completing our $30 billion divestment programme.
And this programme is a crucial part of the push to simplify our portfolio.
Gearing at the end of 2017 was 24.8% versus 28% at the end of 2016.
This represents a reduction in our net debt of $8 billion.
Shell announced a dividend of $0.47 per share in respect of the fourth quarter 2017.
And from this quarter, the dividend will be paid entirely in cash following our announcement to cancel the scrip dividend.
And we expect to announce an unchanged dividend also of $0.47 per share for the first quarter 2018.
So 2017 was a year of transformation, where we showed we have what it takes to deliver a World Class Investment Case.
And we enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash.
Thank you very much for watching this message.
Summary of unaudited results
$ million
| Q4 2017 | Q3 2017 | Q4 2016 | % 1 | Definition | Full year 2017 |
Full year 2016 |
% | |
|---|---|---|---|---|---|---|---|---|
| 3,807 | 4,087 | 1,541 | +147 | Income/(loss) attributable to shareholders | 12,977 | 4,575 | +184 | |
| 3,082 | 3,698 | 1,032 | +199 | CCS earnings attributable to shareholders | Note 2 | 12,081 | 3,533 | +242 |
| (1,221) | (405) | (763) | Of which: Identified items2 | A | (3,683) | (3,652) | ||
| 4,303 | 4,103 | 1,795 | +140 | CCS earnings attributable to shareholders excluding identified items | 15,764 | 7,185 | +119 | |
| 94 | 105 | 40 | Add: CCS earnings attributable to non-controlling interest | 418 | 270 | |||
| 4,397 | 4,208 | 1,835 | +140 | CCS earnings excluding identified items | 16,182 | 7,455 | +117 | |
| Of which: | ||||||||
| 1,636 | 1,282 | 907 | Integrated Gas | 5,268 | 3,700 | |||
| 1,650 | 562 | 54 | Upstream | 3,091 | (2,704) | |||
| 1,396 | 2,668 | 1,339 | Downstream | 9,082 | 7,243 | |||
| (285) | (304) | (465) | Corporate | (1,259) | (784) | |||
| 7,275 | 7,582 | 9,170 | -21 | Cash flow from operating activities | 35,650 | 20,615 | +73 | |
| (665) | (3,912) | (3,429) | Cash flow from investing activities | (8,029) | (30,963) | |||
| 6,610 | 3,670 | 5,741 | Free cash flow | H | 27,621 | (10,348) | ||
| 0.46 | 0.50 | 0.19 | +142 | Basic earnings per share ($) | 1.58 | 0.58 | +172 | |
| 0.37 | 0.45 | 0.13 | +185 | Basic CCS earnings per share ($) | B | 1.47 | 0.45 | +227 |
| 0.52 | 0.50 | 0.22 | +136 | Basic CCS earnings per share excl. identified items ($) | 1.92 | 0.92 | +109 | |
| 0.47 | 0.47 | 0.47 | - | Dividend per share ($) | 1.88 | 1.88 | - |
1 Q4 on Q4 change
2 Fourth quarter 2017 includes a non-cash charge of $2,014 million related to the impact of the US tax reform legislation.
CCS earnings attributable to shareholders excluding identified items were $4.3 billion for the fourth quarter 2017 and $15.8 billion for the full year 2017, reflecting increased contributions from all businesses, compared with 2016. Full year earnings benefited mainly from higher realised oil, gas and LNG prices, improved refining performance and higher production from new fields, which offset the impact of field declines and divestments.
Cash flow from operating activities for the fourth quarter 2017 of $7.3 billion included negative working capital movements of $1.1 billion. Excluding working capital effects, cash flow from operations was $8.4 billion. Full year 2017 cash flow from operating activities of $35.7 billion included negative working capital movements of $3.2 billion.
Total dividends distributed to shareholders in the quarter were $3.9 billion, of which $1.6 billion were settled by issuing 52.7 million A shares under the Scrip Dividend Programme. In November, Shell announced the cancellation of the Scrip Dividend Programme from the fourth quarter 2017. Shell expects to announce a dividend of $0.47 per ordinary share and $0.94 per American Depositary Share for the first quarter 2018.
Additional performance measures
$ million
| Q4 2017 | Q3 2017 | Q4 2016 | % 1 | Definition | Full year 2017 |
Full year 2016 |
% | |
|---|---|---|---|---|---|---|---|---|
| 6,778 | 5,742 | 6,913 | Capital investment 2 | C | 24,006 | 79,877 | ||
| 6,474 | 1,365 | 3,278 | Divestments | D | 17,340 | 4,984 | ||
| 3,756 | 3,657 | 3,905 | -4 | Total production available for sale (thousand boe/d) | 3,664 | 3,668 | - | |
| 55.28 | 47.06 | 44.54 | +24 | Global liquids realised price ($/b) | 49.00 | 38.64 | +27 | |
| 4.40 | 4.15 | 4.03 | +9 | Global natural gas realised price ($/thousand scf) | 4.27 | 3.65 | +17 | |
| 9,776 | 9,477 | 9,895 | -1 | Operating expenses | G | 38,083 | 41,549 | -8 |
| 9,839 | 9,197 | 9,844 | - | Underlying operating expenses | G | 37,556 | 38,342 | -2 |
| 5.8% | 5.0% | 3.0% | ROACE (reported income basis) | E | 5.8% | 3.0% | ||
| 5.6% | 4.6% | 2.9% | ROACE (CCS basis excluding identified items) | E | 5.6% | 2.9% | ||
| 24.8% | 25.4% | 28.0% | Gearing | F | 24.8% | 28.0% |
1 Q4 on Q4 change
2 Full year 2016 included $52,904 million related to the acquisition of BG Group plc.
A, B, C, D, E, F, G, H and Note 2 - refer to the full quarterly results announcement for definitions.
CEO statement
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“2017 was a year of strong financial performance for Shell. A year of transformation, in which we showed we have what it takes to deliver a world-class investment case. Our relentless focus on value, performance and competitiveness meant we were able to deliver $39 billion of cash flow from operations excluding working capital movements from our upgraded portfolio. We strengthened our financial framework during the year through an $8 billion reduction in our net debt, while our increased free cash flow generation gave us the confidence to cancel the scrip dividend programme in the fourth quarter, in line with what we said previously.
We reported strong earnings for the quarter underpinned by continued delivery momentum. Cash flow reflected higher tax payments and increased cash requirements in relation to our trading business. We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash.”