Second quarter 2019 results – August 1, 2019
Aug 1, 2019
On Thursday August 1, 2019 at 07.00 BST (08.00 CEST and 02.00 EDT) Royal Dutch Shell plc released its second quarter results and second quarter interim dividend announcement for 2019.
On this page a summarised overview of the Royal Dutch Shell plc second quarter 2019 results and links to the full set of results documents and webcast.
Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc, comments on the second quarter 2019 results.
Video accessibility transcript
Title: Q2 Results July 2019
Duration 02:35
Description:
A video led by Ben van Beurden summarising the Q2 July 2019 Results
Accessibility Script
[Audio]
Theme music begins
[Vison]
Ben van Beurden stands in front of an off-white background
[Animation footage]
Graphic on screen reads: Ben van Beurden Shell CEO
[Ben to Camera]
Today we are reporting our financial results for the second quarter 2019.
And, let me share the main messages for this quarter.
We have delivered a good cash flow performance, despite earnings volatility
[Animation footage]
good cash flow performance
[Ben to Camera]
in a quarter that has seen challenging macroeconomic conditions
in refining and chemicals as well as lower gas prices.
Our Marketing business continued to generate resilient earnings.
[Animation footage]
Graphics appear reading: challenging macroeconomic conditions
[Ben to Camera]
This quarter we achieved some key milestones
such as the start-up of Appomattox and the first LNG cargo from Prelude.
[Animation footage]
Graphics appear reading: achieved key milestones
[Ben to Camera]
And, these add to our competitive portfolio
which is expected to generate additional cash in the coming quarters.
[Animation footage]
Graphics appear reading: competitive portfolio
[Ben to Camera]
The resilience of our Upstream and customer facing businesses
and their ability to generate cash support the delivery of our 2020 outlook
which remains unchanged.
[Animation footage]
Graphics appear reading: business resilience
[Vision]
Ben van Beurden stands in front of an off-white background
[Ben to Camera]
So, let’s look at some of our projects in more detail.
[Vision]
Full frame footage of Appomattox at sunset and lit up against a dark sky with several workers silhouetted in the foreground.
Graphics appear in reading: Months ahead of schedule.
Appomattox in the distance at sea.
Graphics appear in reading: 40% under budget.
Shots of Appomattox being towed out to sea shot from above and in front.
[Audio from Ben]
We announced the start of production at Appomattox in the Gulf of Mexico,
months ahead of schedule and at more than 40% under budget.
Production is expected to reach 175,000 barrels a day.
[Ben to Camera then audio]
And, in Australia, since June, we have been shipping LNG cargoes to customers in Asia.
[Vision]
High up on the Prelude floating vessel, men watch the LNG cargo transfer. View of Prelude with LNG cargo vessel aside.
[Vision]
Ben van Beurden stands in front of an off-white background
[Ben to Camera]
In this quarter we also announced the sale of the Martinez Refinery in California
and of our interest in the SASREF Refinery in Saudi Arabia.
[Ben to Camera then audio]
And, these divestments enable Shell to focus our refining footprint around key trading hubs, value chains and customers.
[Vision]
Shell Pernis Refinery, metal tubes and pipework. Flying to the side of the refinery with storage tanks and sea in the background.
[Vision]
Ben van Beurden stands in front of an off-white background
[Ben to Camera]
And continued high grading of our portfolio together with a strong focus
on operational performance will be key to delivering on our ambitions.
So, let’s have a look at the key numbers for the second quarter.
[Animation footage]
SA full frame graphics reads: Shell Results Summary Q2 2019 $10.5 billion cash flow from operations excl. working capital movements
[Audio from Ben]
$10.5 billion of cash flow from operations that's excluding working capital movements
[Animation footage]
A full frame graphics reads: Shell Results Summary Q2 2019 $6.9 billion of free cash flow
[Audio from Ben]
$6.9 billion of free cash flow
[Animation footage]
A full frame graphics reads: Shell Results Summary $3.5 billion of earnings on a CCS basis excl. identified items.
[Audio from Ben]
$3.5 billion of earnings on a current cost of supply basis excluding identified items.
And, all of this at an average oil price of $69 per barrel this quarter.
The return on average capital employed was 8.2%.
[Animation footage]
A full frame graphics reads: Shell results summary Q2 2019 the ROACE 8.2%.
[Vision]
Ben van Beurden stands in front of an off-white background
[Ben to Camera]
So, despite some headwinds in the quarter
we achieved results that show the strength of our strategy and our portfolio.
[Animation footage]
Graphics appear reading: strength of our strategy and portfolio
[Ben to Camera]
We are building on strong foundations for the future
and I am confident we can deliver this 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
| Q2 2019 (1) | Q1 2019 (1) | Q2 2018 | % (2) | | Reference | Half year 2019 (1)) | Half year 2018 | % |
|---|---|---|---|---|---|---|---|---|
| 2,998 | 6,001 | 6,024 | -50 | Income/(loss) attributable to shareholders | | 8,999 | 11,923 | -25 |
| 3,025 | 5,293 | 5,226 | -42 | CCS earnings attributable to shareholders | Note 2 | 8,318 | 10,929 | -24 |
| (437) | (8) | 535 | | Of which: Identified items | A | (445) | 837 | |
| 3,462 | 5,301 | 4,691 | -26 | CCS earnings attributable to shareholders excluding identified items | | 8,763 | 10,092 | -13 |
| 130 | 131 | 121 | | Add: CCS earnings attributable to non-controlling interest | | 260 | 242 | |
| 3,592 | 5,432 | 4,812 | -25 | CCS earnings excluding identified items | | 9,024 | 10,334 | -13 |
| | | | | Of which: | | | | |
| 1,726 | 2,569 | 2,305 | | Integrated Gas | | 4,294 | 4,744 | |
| 1,335 | 1,725 | 1,457 | | Upstream | | 3,060 | 3,008 | |
| 1,338 | 1,822 | 1,660 | | Downstream | | 3,160 | 3,426 | |
| (806) | (684) | (610) | | Corporate | | (1,490) | (844) | |
| 11,031 | 8,630 | 9,500 | +16 | Cash flow from operating activities | | 19,661 | 18,972 | +4 |
| (4,166) | (4,622) | 29 | | Cash flow from investing activities | | (8,788) | (4,265) | |
| 6,865 | 4,008 | 9,529 | | Free cash flow | H | 10,873 | 14,707 | |
| 0.37 | 0.74 | 0.72 | -49 | Basic earnings per share ($) | | 1.11 | 1.44 | -23 |
| 0.37 | 0.65 | 0.63 | -41 | Basic CCS earnings per share ($) | B | 1.02 | 1.32 | -23 |
| 0.43 | 0.65 | 0.56 | -23 | Basic CCS earnings per share excl. identified items ($) | | 1.08 | 1.21 | -11 |
| 0.47 | 0.47 | 0.47 | - | Dividend per share ($) | | 0.94 | 0.94 | - |
(1) IFRS 16 Leases (IFRS 16) was adopted with effect from January 1, 2019. See Note 8 “Adoption of IFRS 16 Leases”.
(2) Q2 on Q2 change.
Please refer to the full quarterly results announcement for Notes 1 through 8 and Alternative performance measures A through I.
Compared with the second quarter 2018, CCS earnings attributable to shareholders excluding identified items were $3.5 billion, reflecting lower realised oil, gas and LNG prices, weaker realised chemicals and refining margins as well as higher provisions, partly offset by improved production. Earnings also included a negative impact of $63 million related to the implementation of IFRS 16.
Cash flow from operating activities for the second quarter 2019 was $11.0 billion and included positive working capital movements of $0.6 billion. Compared with the second quarter 2018, cash flow from operating activities excluding working capital movements mainly reflected lower earnings, partly offset by reduced cash margining outflows on commodity derivatives. This also included a positive impact of $1.0 billion related to the implementation of IFRS 16.
Total dividends distributed to shareholders in the quarter were $3.8 billion. Today, Shell launches the next tranche of the share buyback programme, with a maximum aggregate consideration of $2.75 billion in the period up to and including October 28, 2019. In aggregate, since the launch of the share buyback programme, almost 294 million A ordinary shares have been bought back for cancellation for a consideration of $9.25 billion.
Additional performance measures
$ million
| Q2 2019 | Q1 2019 | Q2 2018 | % (1) | | Reference | Half year 2019 | Half year 2018 | % |
|---|---|---|---|---|---|---|---|---|
| 5,337 | 5,601 | 5,518 | | Cash capital expenditure (2) | C | 10,938 | 10,746 | |
| 6,341 | 6,685 | 5,750 | | Capital investment (3) | C | 13,026 | 11,282 | |
| 3,583 | 3,752 | 3,442 | +4 | Total production available for sale (thousand boe/d) | | 3,667 | 3,639 | +1 |
| 61.26 | 57.42 | 66.24 | -8 | Global liquids realised price ($/b) | | 59.26 | 63.49 | -7 |
| 4.21 | 5.37 | 4.86 | -13 | Global natural gas realised price ($/thousand scf) | | 4.83 | 4.91 | -2 |
| 9,941 | 8,917 | 10,006 | -1 | Operating expenses | G | 18,859 | 19,725 | -4 |
| 9,477 | 8,865 | 9,844 | -4 | Underlying operating expenses | G | 18,343 | 19,630 | -7 |
| 8.4% | 9.2% | 8.1% | | ROACE (Net income basis) | E | 8.4% | 8.1% | |
| 8.2% | 8.4% | 7.6% | | ROACE (CCS basis excluding identified items) (4) | E | 8.2% | 7.6% | |
| 27.6% | 26.5% | 23.6% | | Gearing | F | 27.6% | 23.6% | |
(1) Q2 on Q2 change.
(2) With effect from 2019, Cash capital expenditure has been introduced as a capital spent performance measure (see Reference C).
(3) With effect from 2019, the definition has been amended (see Reference C). Comparative information has been revised.
(4) With effect from 2019, the definition has been amended (see Reference E). Comparative information has been revised.
Please refer to the full quarterly results announcement for Notes 1 through 8 and Alternative performance measures A through I.
Supplementary financial and operational disclosure for this quarter is available at www.shell.com/investor.
As a result of the implementation of IFRS 16, net debt increased by $16,103 million. Second quarter 2019 reported Gearing was 27.6% on an IFRS 16 basis, comparable with 23.0% on an IAS 17 basis. Gearing included an additional negative impact of 0.4%, arising from IFRS 11 accounting interpretations (see Note 1).
CEO statement
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices. This quarter we achieved some key milestones, such as the start-up of Appomattox and the first LNG cargo from Prelude. These add to our competitive portfolio, which is expected to generate additional cash in the coming quarters.
The resilience of our Upstream and customer-facing businesses and their ability to generate cash support the delivery of our 2020 outlook, which remains unchanged.”