Fourth quarter 2018 results – January 31, 2019
Jan 31, 2019
On Thursday January 31, 2019 at 07.00 GMT (08.00 CET and 02.00 EST) Royal Dutch Shell plc released its fourth quarter results and fourth quarter interim dividend announcement for 2018.
On this page a summarised overview of the Royal Dutch Shell plc fourth quarter 2018 results and links to the full set of results documents and webcast.
Jessica Uhl, Chief Financial Officer of Royal Dutch Shell plc, comments on the fourth quarter 2018 results.
Title: Q4 CEO Report
Duration 02:36
Description:
A video lead by Jessica Uhl summarising the Q4 CEO report.
Accessibility Script
[Audio]
Theme music begins
[Vison]
Jessica Uhl stands in front of an off-white background
[Animation footage]
Graphic on screen reads: Jessica Uhl Shell CFO
[Jessica to Camera]
Welcome, we are reporting another set of strong financials for the fourth quarter of 2018. Before I share the quarterly numbers, let me reflect on how we've demonstrated delivery against our strategy throughout the full year. Shell has delivered a very strong financial performance in 2018,
[Animation footage]
A full frame graphics reads: 2018 cashflow from operations $49.6 billion excluding working capital movements
[Audio from Jessica]
with cash flow from operations of $49.6 billion, excluding working capital movements.
[Vision]
Jessica Uhl stands in front of an off-white background
[Jessica to Camera]
We’ve delivered on our promises for the year. Completing the $30 billion divestment programme, starting-up key growth projects, while also maintaining discipline on capital investment.
[Animation footage]
Graphics appear reading: Completed $30 billion divestment programme
start up key growth projects
maintain capital discipline
[Jessica to Camera]
We paid our entire dividend in cash, further reduced our debt and launched our
share buy-back programme, with $4.5 billion in shares repurchased so far.
[Animation footage]
Graphic appears reading: paid entire dividend in cash further reduced debit. launches share buy-back programme. $4.5 billion in shares repurchased
[Jessica to Camera]
We will continue with a strong delivery focus in 2019, with a disciplined approach to capital investment and growing cash flow and returns.
[Vision]
Footage from a Shell service station at night as people fill up their cars.
[Animation footage]
Graphics appear reading: continue with a strong delivery focus in 2019
a disciplined approach to capital investment
growing cashflow and returns
[Vision]
Jessica Uhl stands in front of an off-white background
[Jessica to Camera]
Our strategy to deliver a world class investment case is working.
I would also like to share a few exciting developments in our portfolio.
[Vision]
Footage of a Shell facility in Geismar from aerial views.
[Animation footage]
Graphics appear reading: fourth alpha olefins unit…at our Geismar facility.
[Audio from Jessica]
In the United States, we started up our fourth alpha olefins unit at our Geismar facility, increasing capacity by 425,000 tonnes a year.
[Vision]
A photograph of a Shell North Sea site at night.
[Animation footage]
A graphic reads: Claire Phase II
[Audio from Jessica]
In the North Sea, our Upstream business started up Clair Phase 2.
[Vision]
Aerial footage of a Shell ocean site in Australia
[Animation footage]
A graphic reads: Prelude floating LNG facility
[Audio from Jessica]
and in Australia, our Prelude floating LNG facility had first gas in from wells
and is progressing with commissioning and start-up.
[Vision]
Jessica Uhl stands in front of an off-white background
[Jessica to Camera]
Now, let me take you through the key numbers of the fourth quarter of 2018.
[Animation footage]
Graphic reads: Shell Results Summary Q4 2018
$12.9 billion cash flow from operations ex working capital movements
[Audio from Jessica]
$12.9 billion of cash flow from operations excluding working capital movements.
[Animation footage]
Graphic reads: Shell Results Summary Q4 2018
$16.7 billion free cash flow
[Audio from Jessica]
$16.7 billion of free cash flow.
[Animation footage]
Graphic reads: Shell Results Summary Q4 2018
$5.7 billion earnings on a CCS basis
[Audio from Jessica]
$5.7 billion of earnings on a current cost of supplies basis, excluding identified items. All of this at an average Brent price of $69 per barrel.
[Animation footage]
Graphic reads: Shell Results Summary Q4 2018
7.6% ROACE
[Audio from Jessica]
Return on average capital employed was 7.6%
[Vision]
Jessica Uhl stands in front of an off-white background
[Animation footage]
Graphic appears reading: 20.3% gearing and $14.5 billion net debt reduction
[Audio from Jessica]
Gearing at the end of the year was 20.3%, reflecting a reduction in our net debt of $14.5 billion over the course of the year. 2018 was a great year. A year of delivery.
Our relentless focus on value, project delivery and competitiveness means we’ve delivered strong returns and cash flow from our upgraded portfolio. Our focus for 2019 and beyond remains the same and I’m confident we can deliver a world-class investment case.
[Audio]
Theme music
[Graphic]
Shell logo
#ShellResults
©Shell International Limited 2019
[Graphic]
Graphic appears reading: Thank you for visiting our site. Please understand that an investment in Royal Dutch Shell plc securities carries with it the risk that you could sustain losses as a result of your investment. Therefore, an investment in Royal Dutch Shell plc securities may not be appropriate for all investors. Accordingly, before investing in our securities we urge you to read our Annual Report and Form 20-F and consider the risks discussed within. You can find our Annual report and Form 20-F on the link next to this presentation. Again, thank you for your interest in Royal Dutch Shell plc.
[Graphic]
A graphic appears titled Definitions and cautionary note, relevant to the video.
Summary of unaudited results
$ million
| Q4 2018 | Q3 2018 | Q4 2017 | % (1) | | Definition | Full year 2018 | Full year 2017 | % |
|---|---|---|---|---|---|---|---|---|
| 5,590 | 5,839 | 3,807 | +47 | Income/(loss) attributable to shareholders | | 23,352 | 12,977 | +80 |
| 7,334 | 5,570 | 3,082 | +138 | CCS earnings attributable to shareholders | Note 2 | 23,833 | 12,081 | +97 |
| 1,646 | (54) | (1,221) | | Of which: Identified items | A | 2,429 | (3,683) | |
| 5,688 | 5,624 | 4,303 | +32 | CCS earnings attributable to shareholders excluding identified items | | 21,404 | 15,764 | +36 |
| 120 | 169 | 94 | | Add: CCS earnings attributable to non-controlling interest | | 531 | 418 | |
| 5,808 | 5,793 | 4,397 | +32 | CCS earnings excluding identified items | | 21,935 | 16,182 | +36 |
| | | | | Of which: | | | | |
| 2,363 | 2,292 | 1,636 | | Integrated Gas | | 9,399 | 5,268 | |
| 1,881 | 1,886 | 1,650 | | Upstream | | 6,775 | 3,091 | |
| 2,131 | 2,010 | 1,396 | | Downstream | | 7,567 | 9,082 | |
| (567) | (395) | (285) | | Corporate | | (1,806) | (1,259) | |
| 22,021 | 12,092 | 7,275 | +203 | Cash flow from operating activities | | 53,085 | 35,650 | +49 |
| (5,312) | (4,082) | (665) | | Cash flow from investing activities | | (13,659) | (8,029) | |
| 16,709 | 8,010 | 6,610 | | Free cash flow | H | 39,426 | 27,621 | |
| 0.68 | 0.70 | 0.46 | +48 | Basic earnings per share ($) | | 2.82 | 1.58 | +78 |
| 0.89 | 0.67 | 0.37 | +141 | Basic CCS earnings per share ($) | B | 2.88 | 1.47 | +96 |
| 0.69 | 0.68 | 0.52 | +33 | Basic CCS earnings per share excl. identified items ($) | | 2.58 | 1.92 | +34 |
| 0.47 | 0.47 | 0.47 | - | Dividend per share ($) | | 1.88 | 1.88 | - |
| | | | | | | | | |
(1) Q4 on Q4 change.
Compared with the fourth quarter 2017, CCS earnings attributable to shareholders excluding identified items of $5.7 billion mainly benefited from higher realised oil, gas and LNG prices as well as stronger contributions from crude oil and LNG trading, partly offset by movements in deferred tax positions. Full year earnings of $21.4 billion also reflected higher realised oil, gas and LNG prices, partly offset by movements in deferred tax positions.
Cash flow from operating activities for the fourth quarter 2018 was $22.0 billion, which included positive working capital movements of $9.1 billion, mainly as a result of a fall in crude oil price and lower inventory levels. Excluding working capital movements, cash flow from operations of $12.9 billion mainly reflected increased earnings, compared with the fourth quarter 2017.
Total dividends distributed to shareholders in the quarter were $3.9 billion. In January 2019, the second tranche of the share buyback programme was completed, with 83.5 million A ordinary shares bought back for cancellation for an aggregate consideration of $2.5 billion. Today, Shell launches the next tranche of the share buyback programme, with a maximum aggregate consideration of $2.5 billion in the period up to and including April 29, 2019.
Additional performance measures
$ million
| Q4 2018 | Q3 2018 | Q4 2017 | % (1) | | Definition | Full year 2018 | Full year 2017 | % |
|---|---|---|---|---|---|---|---|---|
| 7,995 | 5,830 | 6,778 | | Capital investment | C | 24,779 | 24,006 | |
| 2,699 | 613 | 6,474 | | Divestments | D | 7,102 | 17,340 | |
| 3,788 | 3,596 | 3,756 | +1 | Total production available for sale (thousand boe/d) | | 3,666 | 3,664 | - |
| 59.89 | 68.21 | 55.28 | +8 | Global liquids realised price ($/b) (2) | | 63.85 | 49.00 | +30 |
| 5.75 | 4.92 | 4.44 | +30 | Global natural gas realised price ($/thousand scf) (2) | | 5.13 | 4.33 | +18 |
| 10,279 | 9,312 | 9,776 | +5 | Operating expenses | G | 39,316 | 38,083 | +3 |
| 10,147 | 9,248 | 9,839 | +3 | Underlying operating expenses | G | 39,025 | 37,556 | +4 |
| 9.4% | 8.7% | 5.8% | | ROACE | E | 9.4% | 5.8% | |
| 7.6% | 7.1% | 5.6% | | ROACE (CCS basis excluding identified items) | E | 7.6% | 5.6% | |
| 20.3% | 23.1% | 25.0% | | Gearing (3) | F | 20.3% | 25.0% | |
(1) Q4 on Q4 change.
(2) Following a reassessment, third quarter 2018 (liquids realised price) and the four quarters of 2017 (natural gas realised price) have been revised.
(3) With effect from 2018, the net debt calculation has been amended (see Definition F). Gearing as previously published at December 31, 2017 was 24.8%.
CEO statement
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“Shell delivered a very strong financial performance in 2018, with cash flow from operations of $49.6 billion, excluding working capital movements. We delivered on our promises for the year, including the completion of the $30 billion divestment programme and starting up key growth projects while maintaining discipline on capital investment. We paid our entire dividend in cash, further reduced our debt and launched our share buyback programme, with $4.5 billion in shares repurchased so far.
We will continue with a strong delivery focus in 2019, with a disciplined approach to capital investment and growing both our cash flow and returns. Our strategy to deliver a world-class investment case is working.”