Earnings of Royal Dutch Shell Increased by 184 Percent Due to Higher Oil Prices

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An increase in income amounting to 184 percent for 2017 has been reported by Royal Dutch Shell, thanks in part to higher gas and oil prices.

Income grew to $12.98bn (£9.11bn) in 2017 as compared with the $4.58bn in 2016.

Basic earnings per share increased by 172 percent, from $0.58 to $1.58, and the dividend remained at $1.88.

The oil giant made a capital investment amounting to $24bn last year, down from the $79.9bn that the company invested the year before – however, this included $53bn that is related to the takeover of the BG Group.

Despite the figures of Shell coming in ahead of expectations, the stocks of the company were down by around two percent during early trading, showing a weaker than expected cash inflow during the fourth quarter.

The fund manager of the Hargreaves Lansdown Select UK Income Shares fund, Steve Clayton, pointed out that the cash flow was strong for the year, “demonstrating Shell’s better capital discipline.” However, he noted that “Q4 bucked the trend, with a weaker than expected cash inflow, reflecting swings in the trading businesses’ derivative positions and higher tax charges.”

The group said that it booked a $2bn charged during the fourth quarter, because of the impact of the tax reform in the United States introduced by US President Donald Trump.

Ben van Beurden, the chief executive, stated: “2017 was a year of strong financial performance for Shell. A year of transformation, in which we showed we have what it takes to deliver a world-class investment case. Our relentless focus on value, performance and competitiveness meant we were able to deliver $39bn of cash flow from operations excluding working capital movements from our upgraded portfolio.

“We strengthened our financial framework during the year through an $8bn reduction in our net debt, while our increased free cash flow generation gave us the confidence to cancel the scrip dividend programme in the fourth quarter, in line with what we said previously.

“We reported strong earnings for the quarter underpinned by continued delivery momentum. Cash flow reflected higher tax payments and increased cash requirements in relation to our trading business. We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash.”