Energy giant Royal Dutch Shell reported Thursday that its second-quarter profit dropped 56% to $5 billion as oil and gas prices and refining margins fell.
The results, which missed analyst forecasts, showed that while high energy prices have boosted Shell's earnings in recent quarters, it has left the company vulnerable to declines when prices revert to more normal levels.
Shell said it would slow its share buyback program to $3 billion for the next three months, down from $3.6 billion in the previous quarter. However, it raised its dividend to $0.33 per share as planned in June and said buybacks of at least $2.5 billion will be announced with its Q3 results.
The adjusted earnings of $5.1 billion compared to a record $11.5 billion a year earlier and came in below analyst projections of $5.8 billion.
Shell attributed the lower profit mainly to weaker liquefied natural gas trading, lower oil and gas prices, reduced refining margins and lower sales volumes compared to the previous quarter. Benchmark Brent crude averaged $80 a barrel in Q2, down from $110 a year earlier.
Shell reduced its net debt to $40.3 billion, helping lower its gearing ratio by 1 percentage point to 17%. Shell's CEO said the company will continue prioritizing share buybacks "given the value that our shares represent."
Shell shares fell 1.7% on the results on Thursday amid weaker-than-expected earnings from its upstream and chemicals divisions, according to analysts. The company sees results improving in the third quarter amid higher oil prices and stable natural gas prices.
