Shell discounts move to buy back shares

Shell, the Anglo-Dutch oil giant, yesterday dismissed any imminent moves to follow British Petroleum's share buyback plans as it disappointed investors with a bigger-than- expected fall in second-quarter profits.

Shares in the group fell 14.5p to 458.5p against a soaring stock market as Shell revealed a 10 per cent drop in net income between April and June to pounds 1.07bn. It left earnings for the first half of the year down 15 per cent to pounds 2.49bn.

Mark Moody-Stuart, Shell's group managing director, said share buybacks had been considered often but were "just a non-starter" because of a 25 per cent tax charge for investors in the Netherlands.

BP this week announced plans to buy back shares next year to raise its debt levels. Shell, in contrast, has pounds 7bn of cash in the bank.

Hinting at the possibility of a generous interim dividend increase in September, Mr Moody-Stuart said: "I haven't heard shareholders complaining lately. Shell is a huge cash-generating machine."

Shell blamed the profits drop partly on the increase in the value of sterling, which knocked pounds 117m off second-quarter earnings. Another pounds 30m was wiped from chemicals profits after what the group described as "not terribly good planning" saw almost three quarters of the division's maintenance budget spent in just three months. It left chemicals profits outside the US down by 38 per cent in the second quarter to pounds 86m.

In a clear indication yesterday of Shell's drive to inject a more entrepreneurial culture into the organisation, Mr Moody-Stuart revealed that the group was unlikely to meet this year's pounds 8bn investment target. Just 38 per cent of the annual budget was spent by the middle of this year, suggesting divisional managers were paying greater attention to profits.

Shell's rate of return on capital fell in the first half of the year from 11.8 per cent to 11.5 per cent, compared with a modest internal target of 12 per cent and BP's surprise surge in returns to 19 per cent earlier this week.

Fergus McCleod, oil analyst with NatWest Securities, welcomed the investment slowdown. "It's virtually impossible now for them to spend their full investment budget for this year. This is a hopeful sign that efficiencies will come through to the bottom line faster than expected."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat