Shell Swings Back To Profit
Royal Dutch Shell on Thursday announced their profits from the first quarter have swung back as oil prices recover from the previous year.
Shell’s Swift Recovery After COVID-19 Losses
Shell posted a net profit of $5.7 billion (4.7 billion euros) in the first quarter of 2021, a statement from the Anglo-Dutch group read. This contrasted starkly with a loss of $24 million in the first three months of last year when the COVID-19 pandemic took hold and slammed the price of crude oil.
As factories closed and planes were halted, Shell suffered a net loss of $21.7 billion last year. For this reason, the company was forced to axe 9,000 jobs, more than 10 per cent of its international workforce.
Oil Price Fluctuations
These losses and job cuts reflected a similar situation for much of the energy sector last year.
As several countries entered national lockdowns towards the end of the first quarter in 2020, oil prices dropped significantly, even at one point turning negative. Prices thankfully rebounded sharply, however, with the benchmark Brent North Sea oil contract currently trading around $67 per barrel.
Shell rival, BP, also recovered in the first three months of 2021, announcing this week a net profit of $4.7 billion, compared with a loss of $4.4 billion in the first quarter of 2020.
France’s Total, meanwhile, posted a net profit of $3.3 billion that was even higher than pre-pandemic levels.
Shell’s Shares Begin To Climb
After Shell’s announcement on Thursday, shares in the oil group climbed around 1.0 per cent in early London trading. Shell increased its dividend payout by about 4.0 per cent compared to the final quarter of the previous year.
According to the Anglo-Dutch group, the catastrophic Texas winter storm earlier in the year cost the company $200 million in the first quarter on reduced oil output.
The extreme winter weather hit the group’s Texas operations and led to a drag on adjusted earnings. The February storm left millions of residents without power and water, killed dozens of people and caused billions of dollars worth of damage to the sector and bankrupted many Texas electric firms.