Shell 2022 Profit More Than Doubles to Record $40 Billion

February 2, 2023Updated: February 2, 2023

LONDON—Shell delivered a record $40 billion profit in 2022, the energy giant said on Thursday, capping a tumultuous year in which a surge in energy prices allowed it to hand shareholders unprecedented returns.

The British company’s record earnings, which more than doubled from a year earlier, mirror those reported by U.S. rivals earlier this week and are certain to intensify pressure on governments to further raise taxes on the sector.

“We intend to remain disciplined while delivering compelling shareholder returns,” Chief Executive Wael Sawan said in a statement on the first set of earnings since he took the helm on Jan. 1.

Shell also posted record fourth-quarter profit of $9.8 billion on the back of a strong recovery in earnings from liquefied natural gas (LNG) trading, beating analyst forecasts for an $8 billion profit.

The annual profit of $39.9 billion far exceeded the previous record of $31 billion in 2008. It was driven by higher oil and gas prices, robust refining margins, and a strong trading.

Shell shares were up 3 percent by 1050 GMT, compared with a small gain in the broader European energy index.

Earnings from its LNG division reached $6 billion, a record high, boosted by strong overall trading earnings on the back the gas price volatility, despite recording a loss in the third quarter and a sharp drop in liquefaction volumes due to outages at LNG facilities.

Shell said it expects to incur around $2.4 billion in accounting costs related to the windfall levies in 2022, and that it will pay $500 million in cash tax in Britain this year.

Buybacks Continue

Sawan, who earlier this week announced changes to Shell’s structure, sought to convey a sense of continuation of his predecessor Ben van Beurden’s strategy.

“The company is in very good health. We have absolutely the right strategy and my core focus over the coming decade is to make sure that I can support the company as we operationalize strategy,” Sawan told reporters.

Shell will update investors on its strategy in June.

As previously announced, Shell boosted its dividend by 15 percent in the fourth quarter, the fifth increase since it delivered a more than 60 percent cut in the wake of the 2020 COVID-19 pandemic.

The company also announced a new $4 billion share buyback program over the next three months, unchanged from the previous three. It bought back $19 billion in shares in the year to February 2023, nearly double the total in pre-pandemic 2019.

The profits helped Shell and many other Western energy companies mask huge writedowns they took on Russian assets they abruptly exited after the conflict broke out.

Shell however said on Thursday that it continued to export some LNG from Russia.

The surge in revenue helped Shell sharply reduce its debt to $44.8 billion at the end of 2022 from $52.6 billion a year earlier. Its debt-to-capital ratio, known as gearing, dipped to 19 percent from 23.1 percent a year earlier.

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