Shell’s (SHEL) Q1 print misses on top, bottom lines but net income beats estimates

Shell plc (NYSE: SHEL) reported first-quarter top and bottom lines that missed analyst expectations, sending its shares slightly lower in London trading Thursday.

The company posted Q1 earnings per share (EPS) of $1.20, falling short of the analyst expectation of $1.94. Revenue for the quarter was $74.7 billion, also below the consensus estimate of $78.42 billion.

However, the adjusted net income came in at $7.7 billion, exceeding the anticipated $6.5 billion based on a consensus compiled by LSEG.

“Strong set of 1Q numbers with Adjusted earnings beating consensus by 10% and CFFO [cash flow from operations] pre-WC by 17%,” Jefferies analysts commented.

“The beat is driven by IG and C&P, while Upstream is weaker than expected. The beat in CFFO pre-WC is $1.6bn higher than earnings beat, suggesting a strong cash conversion during the quarter,” they added.

Similarly, Morgan Stanley analysts said the earnings surprise was fueled “by all divisions except upstream” where Shell had suffered “a higher-than-expected tax expense.”

“Otherwise, Shell benefitted from strong operational performance, a full contribution from Prelude FLNG, and strong trading results,” they added.

Looking ahead, Shell said it expects its cash capital expenditure for the full year 2024 to remain between $22 billion and $25 billion.

Production from Integrated Gas is projected to be between 920,000 and 980,000 barrels of oil equivalent per day (boe/d).

For the corporate segment, adjusted earnings are anticipated to be a net expense of about $400 million to $600 million in the second quarter, and between $1.7 billion and $2.3 billion for the full year 2024.

The 2024 cash capex outlook is unchanged.

In addition, Shell announced a share buyback program worth $3.5 billion, which it plans to complete within the next three months. The company's dividend will remain unchanged.

By Vahid Karaahmetovic

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