Fourth quarter 2019 results – January 30, 2020
Jan 30, 2020
On Thursday January 30, 2020 at 07.00 GMT (08.00 CET and 02.00 EST) Royal Dutch Shell plc released its fourth quarter, full year results and fourth quarter interim dividend announcement for 2019.
On this page a summarised overview of the Royal Dutch Shell plc fourth quarter, full year 2019 results and links to the full set of results documents and webcast.
Shell CEO Ben van Beurden on Q4 2019 results
Title: Q4 Results January 2020
Duration 03:42
Description:
A video led by Ben van Beurden summarising the Q4 January 2020 Results
Accessibility Script
[Audio]
Theme music begins
[Vision]
Ben van Beurden stands in front of a white background
[Animation footage]
Graphic on screen reads: Ben van Beurden Shell CEO
[Ben to Camera]
We finished 2019 with a competitive set of results for the fourth quarter.
We demonstrated resilience and delivered good cash flow despite a year with tough macroeconomic headwinds.
The strength of Shell’s strategy and portfolio has enabled delivery of competitive cash flow performance in 2019 despite challenging macroeconomic conditions in refining and chemicals, as well as lower oil and gas prices.
[Animation footage]
Competitive cash flow in 2019
Challenging macroeconomic conditions
[
Ben to Camera]
We generated $47 billion in cash flow from operations excluding working capital movements and we distributed over $25 billion in dividends and share buybacks to our shareholders.
[Animation footage]
$47 billion
cash flow from operations excl. working capital movements
($42 billion cash flow from operations)
distributed over
$25 billion
to shareholders
[Ben to Camera]
We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks.
Our intention to complete the $25 billion share buyback programme is unchanged, but the pace remains subject to macro conditions and further debt reduction.
[Animation footage]
Capital discipline
World-class project delivery
[Ben to Camera]
We continue to make progress in our portfolio.
[Ben Voice-over]
So, recently we took a final investment decision on the second phase of the Malikai deep water development.
[Footage]
Wide drone shot of of worker walking on helicopter platform of Malikai asset.
Wide drone shot of Malikai platform being towed in the sea by 4 other ships.
[Ben to Camera]
In Trinidad & Tobago, we sanctioned Barracuda, a tieback backfill project for Atlantic LNG.
In the last quarter, we continued to grow our power business by acquiring Hudson Energy, a UK electricity retailer, as well as EOLFI, a French floating wind developer.
In Australia, we invested in the solar developer ESCO Pacific.
In the US, our joint venture Mayflower Wind was selected to supply clean energy from offshore wind to customers in Massachusetts.
[Animation footage]
Trinidad & Tobago
Barracuda, Atlantic LNG
United Kingdom
Hudson Energy
France
EOLFI
Australia
ESCO Pacific
Unites States
Mayflower Wind
[Ben Voice-over]
Overall we made significant progress with our Power business in 2019.
[Footage]
Close-up shots of solar panel. Aerial shot of two workers mounting a solar panel in a solar park.
[Ben on camera]
Today we generate over 700 megawatts of clean power...
[Ben Voice-over]
from wind and solar and directly supply electricity to homes businesses and motorists.
[Vision]
Close up aerial shot of wind turbine. Aerial shot of a big solar park. Aerial shot following the power lines. Aerial shot of homes and businesses. Close-up shot of a hand grabbing an electric vehicle charger. Close-up shot of hand plugging the charger into a vehicle.
[Ben on camera]
We also continued to grow our Integrated Gas business and sustained our Upstream production. Across Upstream and Integrated Gas we sanctioned eight and started up
twelve major projects last year. We are on track to deliver an additional $5 billion of cash flow from these new projects in 2020.
[Animation footage]
Integrated Gas and Upstream
additional $5 billion
cash flow from new projects in 2020
[Ben to Camera]
Now let me take you through
the fourth quarter’s key numbers.
[Ben Voice-over]
$12.3 billion of cash flow from operations
excluding working capital movements
[Animation footage]
SA full frame graphics reads:
Shell Results Summary Q4 2019
$12.3 billion of cash flow from operations
excl. working capital movements
$10.3 billion
cash flow from operations
[Ben Voice-over]
$5.4 billion of free cash flow
[Animation footage]
SA full frame graphics reads:
Shell Results Summary Q4 2019
$5.4 billion of free cash flow
[
Ben Voice-over]
$2.9 billion of earnings on a current cost of supplies basis excluding identified items.
[Animation footage]
SA full frame graphics reads:
Shell Results Summary Q4 2019
$2.9 billion of earnings on a current cost of supplies basis excl. identified items.
$0.9 billion earnings on a CCS basis
[Ben to Camera]
All of this at an average oil price of $63 per barrel this quarter and Downstream margins
well below historical averages.
[Ben Voice-over]
Return on average capital employed was 6.9 %.
[Animation footage]
SA full frame graphics reads:
Shell Results Summary Q4 2019
6.9 %
ROACE
[Ben Voice-over]
And our gearing is now 29.3%.
[Animation footage]
SA full frame graphics reads:
Shell Results Summary Q4 2019
29.3 %
GEARING
[Ben to Camera]
Our strategy is to deliver a world-class investment case to thrive in the energy transition and to maintain a strong societal licence to operate.
[Animation footage]
World-class investment case
Thrive in the energy transition
Strong societal licence to operate
[Ben to Camera]
And 2019 was a year of progress towards all three ambitions.
Our priorities for 2020 are unchanged. We remain committed to capital discipline as we transform Shell into a simpler company that can deliver higher returns.
Thank you.
[Audio]
Theme music fades out
[Graphic]
Shell logo
#ShellResults
©Shell International Limited 2020
[Graphic]
Graphic appears reading: Thank you for visiting our site. Please understand that an
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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 2019 ¹ | Q3 2019 ¹ | Q4 2018 | % ² | | Reference | Full year 2019 ¹ | Full year 2018 | % |
|---|---|---|---|---|---|---|---|---|
| 965 | 5,879 | 5,590 | -83 | Income/(loss) attributable to shareholders | | 15,843 | 23,352 | -32 |
| 871 | 6,081 | 7,334 | -88 | CCS earnings attributable to shareholders | Note 2 | 15,270 | 23,833 | -36 |
| (2,060) | 1,313 | 1,646 | | Of which: Identified items | A | (1,192) | 2,429 | |
| 2,931 | 4,767 | 5,688 | -48 | CCS earnings attributable to shareholders excluding identified items | | 16,462 | 21,404 | -23 |
| 125 | 149 | 120 | | Add: CCS earnings attributable to non-controlling interest | | 535 | 531 | |
| 3,056 | 4,917 | 5,808 | -47 | CCS earnings excluding identified items | | 16,997 | 21,935 | -23 |
| | | | | Of which: | | | | |
| 1,986 | 2,674 | 2,363 | | Integrated Gas | | 8,955 | 9,399 | |
| 778 | 907 | 1,881 | | Upstream | | 4,744 | 6,775 | |
| 1,368 | 2,153 | 2,131 | | Downstream | | 6,680 | 7,567 | |
| (1,075) | (817) | (567) | | Corporate | | (3,383) | (1,806) | |
| 10,267 | 12,252 | 22,021 | -53 | Cash flow from operating activities | | 42,179 | 53,085 | -21 |
| (4,862) | (2,130) | (5,312) | | Cash flow from investing activities | | (15,779) | (13,659) | |
| 5,405 | 10,122 | 16,709 | | Free cash flow | H | 26,400 | 39,426 | |
| 0.12 | 0.73 | 0.68 | -82 | Basic earnings per share ($) | | 1.97 | 2.82 | -30 |
| 0.11 | 0.76 | 0.89 | -88 | Basic CCS earnings per share ($) | B | 1.89 | 2.88 | -34 |
| 0.37 | 0.59 | 0.69 | -46 | Basic CCS earnings per share excl. identified items ($) | | 2.04 | 2.58 | -21 |
| 0.47 | 0.47 | 0.47 | — | Dividend per share ($) | | 1.88 | 1.88 | — |
(1) IFRS 16 Leases (IFRS 16) was adopted with effect from January 1, 2019. See Note 8 “Adoption of IFRS 16 Leases”.
(2) Q4 on Q4 change.
Please refer to the full quarterly results announcement for Notes 1 through 8 and Alternative performance measures A through I.
CCS earnings attributable to shareholders excluding identified items at $2.9 billion reflected lower realised oil, gas and LNG prices, weaker realised refining and chemicals margins as well as negative movements in deferred tax positions, compared with the fourth quarter 2018. This was partly offset by stronger contributions from LNG trading and optimisation.
Cash flow from operating activities excluding working capital movements at $12.3 billion reflected lower inflows related to commodity derivatives and lower cash earnings, partly offset by lower tax payments, compared with the fourth quarter 2018.
Total dividends distributed to shareholders in the quarter were $3.7 billion. Today, Shell launches the next tranche of the share buyback programme, with a maximum aggregate consideration of $1 billion in the period up to and including April 27, 2020. Since the launch of the programme, Shell has bought back almost $15 billion in shares for cancellation.
Additional performance measures
$ million
| Q4 2019 | Q3 2019 | Q4 2018 | % ¹ | | Reference | Full year 2019 | Full year 2018 | % |
|---|---|---|---|---|---|---|---|---|
| 6,883 | 6,098 | 7,430 | | Cash capital expenditure ² | C | 23,919 | 24,078 | |
| 8,003 | 7,759 | 7,879 | | Capital investment ³ | C | 28,788 | 24,878 | |
| 3,763 | 3,563 | 3,788 | -1 | Total production available for sale (thousand boe/d) | | 3,665 | 3,666 | — |
| 56.60 | 55.99 | 59.89 | -5 | Global liquids realised price ($/b) | | 57.76 | 63.85 | -10 |
| 4.42 | 4.19 | 5.75 | -23 | Global natural gas realised price ($/thousand scf) | | 4.57 | 5.13 | -11 |
| 10,384 | 8,650 | 10,279 | +1 | Operating expenses | G | 37,893 | 39,316 | -4 |
| 9,993 | 8,657 | 10,147 | -2 | Underlying operating expenses | G | 36,993 | 39,025 | -5 |
| 6.7% | 8.6% | 9.4% | | ROACE (Net income basis) | E | 6.7% | 9.4% | |
| 6.9% | 8.1% | 8.7% | | ROACE (CCS basis excluding identified items) ⁴ | E | 6.9% | 8.7% | |
| 29.3% | 27.9% | 20.3% | | Gearing | F | 29.3% | 20.3% | |
(1) Q4 on Q4 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.
The IFRS 16 impact on net debt in 2019 was an increase of $15,657 million. Fourth quarter 2019 reported Gearing was 29.3% on an IFRS 16 basis, comparable with 25.0% on an IAS 17 basis.
The impact of IFRS 16 is presented in Note 8 “Adoption of IFRS 16 Leases” and is not addressed in the performance analysis sections of this results announcement.
A revised fourth quarter 2019 and full year results announcement document has been published on January 31, 2020 to correct typographical errors in the Consolidated Statement of Cash Flows on page 12. The labels for four line items in Cash flow from operating activities have been corrected in this revised version.
Fourth quarter 2019 dividend announcement
CEO statement
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“The strength of Shell’s strategy and portfolio has enabled delivery of competitive cash flow performance in 2019 despite challenging macroeconomic conditions in refining and chemicals, as well as lower oil and gas prices. We generated $47 billion in cash flow from operating activities excluding working capital movements and distributed over $25 billion in dividends and share buybacks to our shareholders.
We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks. Our intention to complete the $25 billion share buyback programme is unchanged, but the pace remains subject to macro conditions and further debt reduction."