As one of the biggest dividend payers in the FTSE 100, the oil giant seems to be “plodding along in the same direction” with the impact of its acquisition of BG Group last year yet to become clear in the results, Khalaf claimed.
Shell’s chief executive Ben van Beurden pointed to the company’s cashflow of $9bn in Q4 of 2016 as a sign the firm is performing, with earnings in Q4 increased to $1.8bn up from £1.6bn in Q4 of 2015.
However full year earnings were down, with the firm reporting earnings of $3.5bn last year compared with $3.8bn in 2015, due in part to £500m of deferred tax reassessments.
Despite the results, Khalaf said: “It has obviously done very well for UK shareholders. It has a record of paying its dividends, so particularly for income stocks it does look likely to maintain its dividend, it might not grow but it’s maintaining that record – although it has used its balance to do it.”
Chief executive van Beurden said debt had also been reduced and the increased cash flow “more than covered” the payments of the cash dividend. He said: “We are operating the company at an underlying cost level that is $10 billion lower than Shell and BG combined only 24 months ago. We are gaining momentum on divestments, with some $15 billion completed in 2016, announced, or in progress, and we are on track to complete our overall $30 billion divestment programme as planned.
“Looking ahead, we will further focus the portfolio and strengthen the company’s financial framework in 2017. Our strategy is starting to pay off and in 2017 we will be investing around $25 billion in high quality, resilient projects. I’m confident 2017 will be another year of progress for Shell to become a world-class investment.”
