Royal Dutch Shell

Royal Dutch Shell

14 August 2018Reading time: 2 minutes

The revenue of Royal Dutch Shell rose 23,7 percent on an annual basis in the second quarter to 89,2 billion dollar. The profit also increased in the same period with 30 percent to 4,7 billion dollar. The profit increase was, amongst other things, due to cost reductions and higher oil prices but was pressured by negative currency exchange rates. Therefore, the profit was lower than the 5,9 billion dollar which analysts polled by Bloomberg had counted on. Furthermore the free cash flow of Shell was 9,5 billion dollar. Shareholders receive a dividend of 0,47 per share over the second quarter. Royal Dutch Shell has also started with its share buyback program, worth of 25 billion dollar. This program must be completed by the end of 2020.

In the first half year, Shell benefited from a higher oil price. However, during the recent period the oil price is pressured by the ascending worldwide trade conflict. In early August the oil price plummeted to the lowest level of the past seven weeks. Investors fear that the trade dispute between China en the United States might slow down the worldwide economic growth. This could have a negative effect on the worldwide demand for oil and other commodities. Amongst others, the International Energy Agency expects a growth slowdown concerning the demand of oil in the second half of this year.

Furthermore, Shell is investing in sustainable energy solutions for quite some time now. Early August, Shell announced that it participated in a financing round of Ample via its investment division Shell Ventures. The American startup Ample eventually collected a total investment amount of 31 million dollar. Ample claims to have developed a platform for fast charging of electric cars. Because the company is still in a startup phase, there is not yet much information available about the underlying technology which is used for this platform. Shell Ventures wants to integrate the technology of Ample into their existing network of gas stations. It remains to be seen how this project with develop itself.

Since the presentation of the second quarter results (July 26th 2018), the stock price of Shell has decreased with almost 5 percent to 28,57 euro (August 9th 2018). On a year-to-year basis the stock price is still 16,6 percent higher. The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider such risk when making their investment decisions. Developments can be different at any time than investors expect, which can result in capital losses.

Vontobel products on Royal Dutch Shell are tradable at DEGIRO.


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16/09/2019 00:32:30