Shell posts weaker-than-expected full-year profit on lower oil prices

British oil giant Shell on Thursday reported a significant drop in annual profit following a year of lower crude prices.

Shell posted adjusted earnings of $23.72 billion for the full-year 2024, compared to annual profit of $28.25 billion a year earlier.

Analysts had expected Shell’s full-year 2024 net profit to come in at $24.71 billion, according to an LSEG-compiled consensus.

The energy major posted weaker-than-anticipated adjusted earnings of $3.66 billion for the final quarter of 2024.

Shell announced another share buyback program of $3.5 billion, which is expected to be completed over the next three months.

“Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of $40 billion across the year, higher than 2023, in a lower price environment,” CEO Wael Sawan said in a Thursday statement.

“Our continued focus on simplification helped to deliver over $3 billion in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets,” he added.

The world’s top oil and gas companies have seen profits fall from record levels in 2022, when Russia’s full-scale invasion of Ukraine prompted international benchmark Brent crude to jump to nearly $140 a barrel.

Oil prices have since cooled amid faltering global demand, with Brent crude futures averaging $80 a barrel in 2024. That was about $2 a barrel less than the previous year, according to the U.S. Energy Information Administration.

In a trading update on Jan. 8, Shell trimmed its liquefied natural gas (LNG) production outlook for the final three months of 2024 and warned that trading results for its chemicals and oil products division were expected to be “significantly lower” on a quarterly basis.

Shares of the London-listed company are up around 4.8% year-to-date.

Shell’s full-year results come as the company enters the final stretch of its so-called “first sprint.” The strategy, which was launched in 2023 and runs to the end of this year, aims to close the valuation gap with U.S. peers by boosting the major’s profitability.

Shell CEO Wael Sawan has prioritized the firm’s more profitable oil and gas operations as part of this shift, while cutting spending on areas such as offshore wind and hydrogen and withdrawing from power markets in Europe and China.

Like other oil and gas majors, Shell has watered down climate targets and green investments in recent years. The company, however, has said it remains committed to becoming a net-zero energy business by 2050.

U.S oil giants Exxon Mobil and Chevron are both scheduled to report earnings on Friday, while European peers TotalEnergies and BP are set to follow suit on Feb. 5 and Feb. 11, respectively.

This breaking news story is being updated.