Shell Navigates Profit Dip with Aggressive $3.5 Billion Shareholder Return
Shell PLC on Thursday reported its lowest quarterly profit since early 2021, a stark reflection of the pressure from declining oil and gas prices. For the final quarter of 2025, adjusted earnings plummeted 40% year-on-year to $3.26 billion, missing analyst forecasts of $3.5 billion.
Full-year earnings followed suit, dropping to $18.5 billion from $23.72 billion in 2024. The company pointed to significant tax adjustments and persistent challenges in its chemicals division as primary drags, even as its integrated gas, upstream, and marketing segments showed resilience.
In a move underscoring its commitment to shareholder returns, Shell's board announced a 4% increase in its dividend to $0.372 per share and launched a fresh $3.5 billion share repurchase program. This continues an aggressive capital return strategy, marking at least 17 consecutive quarters of returning $3 billion or more to investors.
The financial update, however, revealed a growing balance sheet strain. Net debt swelled to $45.7 billion at year-end, up from $41.2 billion just three months prior, pushing the gearing ratio—a key measure of debt to equity—to 20.7% from 18.8%.
Shell's strategy stands in contrast to some European peers, like Norway's Equinor, which recently scaled back buybacks and investments in response to the weaker price environment. The divergence highlights the ongoing debate within the industry on balancing investor rewards with financial prudence and energy transition funding.
Analyst & Investor Reactions:
"The unwavering buyback in the face of rising debt is a clear signal that shareholder returns remain the non-negotiable priority," said Michael Thorne, a senior energy analyst at Veritas Capital. "It's a calculated bet on a price recovery, but it tightens the margin for error on future projects."
"This is fiscal insanity," countered Elara Vance, a portfolio manager at Green Horizon Funds, her tone sharp. "Profits are crumbling, debt is ballooning, and they're burning another $3.5 billion to prop up the share price? It's a short-term sugar rush that robs the company of capital needed for genuine transition. Shareholders today are feasting while the future starves."
"As a long-term shareholder, I appreciate the consistency," commented David Chen, a private investor. "The dividend is a bedrock of my income. The debt increase is a concern, but if it's temporary to maintain the payout through a cycle low, I can understand the logic."