Royal Dutch Shell products in Torzhok, Russia.
Andrey Rudakov | Bloomberg | Getty Images
LONDON — Oil giant Royal Dutch Shell on Thursday reported a sharp drop in full-year profit as the coronavirus pandemic took a heavy toll on the global oil and gas industry.
Shell reported adjusted earnings of $4.85 billion for the full-year 2020. That compared with a profit of $16.5 billion for the full-year 2019. Analysts polled by Refinitiv had expected full-year 2020 net profit to come in $5.15 billion.
For the final quarter of 2020, Shell reported adjusted earnings of $393 million, missing analyst expectations of $470.5 million.
The company said it would raise its first-quarter dividend by 4% from the previous quarter.
The results come as oil and gas giants seek to reassure investors about their future profitability, pointing to an expected upswing in fuel demand in the second half of the year and a mass rollout of Covid vaccines.
However, renewed lockdown measures and limited mobility worldwide amid the ongoing Covid-19 crisis has prompted some of Shell’s peers to warn of a tough start to 2021.
Shares of Shell are up more than 3% year-to-date, having plummeted over 44% last year.
Energy supermajors endured a dreadful 12 months by virtually every measure in 2020 and the industry faces significant challenges and uncertainties as it seeks to recover.
Last year, the Covid pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts.
OPEC+ sees recovery ahead
Oil prices have steadily improved since the start of the year, with WTI climbing to its highest level in more than a year in the previous session. Crude futures have been supported by ongoing production cuts and the mass rollout of Covid vaccines.
OPEC and non-OPEC partners, an oil producer group sometimes referred to as OPEC+, maintained their production policy on Wednesday, buoyed by rising oil prices.
The energy alliance said it was “optimistic” for a year of recovery in 2021.