Shell's first quarter 2021 results presentation | Investor Relations - YouTube

Welcome everyone to our first quarter 2021 presentation.

In 2020 we adapted to extraordinary circumstances.

We took the decisive measures that were needed… to create value today… and set us up to create value tomorrow.

And, in February at our Strategy Day, we presented our plans for the future and laid out our investment case.

So, today I will share how we are delivering on our strategy...

…while at the same time delivering strong financial performance...

… and finally, I will highlight our commitment to transparency

as demonstrated in the various disclosures we made in the first quarter.

Let me start with the delivery of our strategy.

Our strategy, called Powering Progress, seeks to continuously create value…

now and in the future…

For customers, society and shareholders.

Today we will mainly focus on one of our investment case goals of delivering shareholder value.

We plan to do this by accelerating our transformation into a provider of net-zero emissions energy products and services.

That means creating innovative business models, especially in our customer-facing businesses, in our Growth pillar.

And we are already making progress.

In Integrated Power, for example, we announced the acquisition of Next Kraftwerke

a German company that specialises in operating virtual power plants.

A virtual power plant takes the power generated by thousands of homes and businesses…

and uses a sophisticated control and trading system to supply that power to the customers who need it.

For us, Next Kraftwerke is a step in the direction of combining a new, capital light

and attractive business model, like a virtual power plant...

with our established competitive advantage in trading.

And that is how we intend to develop our portfolio…

by bringing our strengths to innovative business models…

and creating value as we do so.

This also brings our Integrated Power business closer to the aim of doubling the amount of electricity we sell to customers…

as we look to reach 560 terawatt hours a year by 2030.

And in our Upstream pillar we also made progress towards delivering on our strategy.

We are focusing our portfolio on nine core positions, while continuously high-grading this portfolio to high-margin barrels.

Today, our core positions generate more than 80% of Upstreams operating cash flows.

And in line with our strategy, this quarter we announced divestments of some non-core shales assets in Canada

as well as conventional oil and gas assets in Egypt and Nigeria.

By focusing our Upstream portfolio on its core… we are simplifying our operating model and generating more cash from our barrels…

… while remaining strongly positioned to gain from sustained upside in commodity prices.

As a general rule, for every $10 increase in the average price of Brent over a year...

...we generate $4 billion more cash in Upstream...

...and $1.2 billion additional cash in Integrated Gas.

And for every $10/bbl increase in JCC-3 prices, we generate another $1.2 billion cash in Integrated Gas in a year.

In summary, we generate a total of $6.4 billion more cash for every $10 increase in Brent and JCC-3… on a post-tax basis.

On May 25th, our Upstream Director, Wael Sawan

will share more details with investors about the Upstream pillar and the important role it plays in Shell's strategy...

… and what we are doing to sustain material cash flows from the Upstream business...

structurally reducing risks, while at the same time improving returns.

This brings me to our financial performance in the quarter.

Commodity prices and energy demand improved in Q1.

Our financial performance for the quarter was strong, even though our results were hit by the Texas winter storm

which had an overall negative impact of some $200 million on our earnings, including credit risk provisions.

Our Adjusted Earnings amounted to more than $3.2 billion.

Our Adjusted EBITDA was almost $11.5 billion on a CCS basis.

And we delivered nearly $12.7 billion of cash flow from operations excluding working capital movements.

We reported $3.4 billion of divestment proceeds this quarter…

and, including announced disposals, we have already achieved our target of $4 billion on average for the year.

This strong financial performance allowed us to further reduce net debt.

Our net debt decreased by $4.1 billion during Q1, despite an outflow of $4.4 billion in working capital.

Our net debt is now $71.3 billion, and our priority remains to reduce it further to $65 billion.

And once we reach this milestone

we aim to distribute, in aggregate, 20 to 30% of our cash flow from operations to our shareholders.

Also, as previously announced, we are growing our dividend per share by 4% this quarter

and we plan to grow it at a similar level every year, subject to Board approval.

Let us now look in more detail at some of the key factors behind our financial performance in Q1.

Our strong Adjusted Earnings were driven by an outstanding performance from Chemicals

resilient earnings from Integrated Gas and Oil Products and robust results from Upstream.

These earnings reflect an improved environment for commodity prices, chemicals and refining margins…

and higher contributions from Oil Products trading, compared with Q4 2020.

And our cash conversion was once again strong, especially in Upstream

which shows the resilience and high-quality of our Upstream portfolio.

We also saw a positive impact from derivatives in Integrated Gas

but lower cash flows from dividends from joint ventures and associates

compared with the fourth quarter 2020, due to the timing of those dividends.

And there was a $4.4 billion working capital outflow in the quarter, largely driven by the increasing price environment.

We have been leading our peer group on cash generation for 4 years in a row now thanks to the quality of our portfolio

the diversity of our cash generation and our relentless capital discipline.

And we are future-proofing our portfolio to continue generating competitive cash flows as the energy transition unfolds.

So we are delivering our strategy.

At the same time we continue delivering strong financial performance.

And it is important that we remain transparent about both our strategy and our performance.

This brings me to my third highlight of today: Transparency.

Because being transparent is key to maintaining and building trust with all of our stakeholders.

Trust from our customers who buy our products…

trust from society that gives us a license to operate…

and trust from our investors who choose to have Shell shares in their portfolios.

In the first quarter, we published a comprehensive set of reports with enhanced disclosures for even more transparency.

Amongst these materials, we published our Sustainability Report and Payments to Governments Report

showing where and how our activities contributed to the countries and communities where we are present.

We also published the Shell Energy Transition Strategy…

which lays out the steps we will take on our path to net-zero emissions…

and, for the first time in the sector, it will be submitted for advisory vote at our next AGM.

We have also significantly enhanced our voluntary financial disclosures in our Quarterly Databook this quarter...

...providing more insight into how each of our business segments contribute to our financial performance.

This will provide additional details that will be helpful for understanding and modelling the value of all of these businesses.

I invite the investor community to join the webcast on May 4th

to hear more about these financial disclosures from the CFOs of each of our segments.

So, to conclude, in 2020 we effectively managed near term challenges.

At the same time, we thoroughly assessed our businesses and capital framework, and we refreshed our plans for the future…

and, in 2021, we are putting those plans into practice.

We are already delivering on our updated strategy, Powering Progress.

At the same time, we are also delivering strong financial performance

because it is through our financial strength that we can invest in the businesses that will generate cash far into the future

strengthen our balance sheet and increase shareholder distributions.

And finally, we take our stakeholders with us as we transform, by growing trust… and remaining committed to transparency.

Our strong performance in Q1 was driven by the strength of our strategy, portfolio and operations.

And we are transforming our portfolio to continue delivering competitive performance in the future...

...starting from a very strong position.

We have a unique platform to provide what our customers want and need.

We have scope and scale that few others can match.

We have a unique network of high quality energy assets. That allows us to achieve superior value.

And we have a strong Upstream business delivering significant value for years to come…

generating cash for shareholder returns…

and also funding our transition. These are fundamental to our investment case...

to grow value for our shareholders today and tomorrow.

Thank you.