KEY POINTS
- Shell reported a $6.9bn Q1 profit, beating expectations and driven by strong trading gains.
- The company raised its dividend by 5% but cut share buybacks to preserve cash amid rising debt.
- Output fell 4% due to Qatar disruptions, with further declines expected in Q2 production.
Shell has reported a first-quarter adjusted profit of $6.9 billion, its strongest performance in two years, surpassing analyst expectations of $6.36 billion. The result represents a sharp increase from $5.58 billion recorded in the same period last year.
The strong performance was driven largely by robust trading gains in its chemicals and products division, which includes refining and oil trading operations. The unit posted profits of $1.93 billion, significantly higher than expectations and a major improvement from $450 million a year earlier.
The company said heightened volatility in global energy markets, partly linked to geopolitical tensions, boosted trading opportunities across its portfolio.
Shell announced a 5% increase in its quarterly dividend, reinforcing its commitment to shareholder returns. However, it simultaneously reduced its share buyback programme to $3 billion from $3.5 billion.
The company explained that the adjustment was intended to preserve cash and strengthen its balance sheet amid short-term liquidity pressures linked to market disruptions and higher debt levels.
Shell’s gearing ratio rose to 23.2% from 20.7% at the end of 2025, reflecting increased borrowing during the period.
Production Falls and Supply Disruptions Hit Output
Oil and gas production declined by about 4% in the quarter, mainly due to outages in Qatar, including damage to part of the Pearl gas-to-liquids facility. Repairs are expected to take up to a year.
For the second quarter, Shell projected further declines in integrated gas production of up to 36%, alongside a possible 14% drop in LNG liquefaction volumes due to ongoing disruptions.
Despite these challenges, Shell maintained that its overall financial position remains strong, with operating cash flow of $6.1 billion, although affected by inventory swings and working capital pressures.
Chief Financial Officer Sinead Gorman said the company remains confident in its long-term cash flow outlook and balance sheet strength, noting that future increases in share buybacks remain possible.
She added that the dividend increase reflects confidence in sustained earnings, even as the company navigates near-term volatility in global oil markets.
