Shell plc reported its unaudited results for the first quarter of 2025, providing a comprehensive snapshot of its financial performance amid a dynamic energy market.
The quarter was marked by a significant rebound in profitability compared to the previous quarter, though year-on-year comparisons reflect ongoing industry challenges.
Key Financial Metrics
- Income Attributable to Shareholders: Shell reported $4,780 million in Q1 2025, a dramatic increase from $928 million in Q4 2024, but a notable decline from $7,358 million in Q1 2024. This quarter-on-quarter surge (+415%) was primarily due to lower exploration write-offs, reduced operating expenses, and higher product margins. However, the figure included a $0.5 billion charge related to the UK Energy Profits Levy and impairment charges, resulting in identified items totaling a net loss of $0.8 billion for the quarter.
- Adjusted Earnings: Adjusted earnings rose to $5,577 million, up 52% from $3,661 million in Q4 2024, though still below the $7,734 million recorded in Q1 2024. This improvement was driven by the same factors influencing net income, adjusted for the identified items.
- Adjusted EBITDA: The company posted adjusted EBITDA of $15,250 million, up 7% from $14,281 million in the previous quarter, but down from $18,711 million in Q1 2024.
- Cash Flow from Operating Activities: Cash flow from operations dropped to $9,281 million, a 29% decrease from $13,162 million in Q4 2024, reflecting higher tax payments and working capital outflows, particularly from movements in accounts receivable and payable.
- Investing and Free Cash Flow: Cash flow from investing activities was an outflow of $3,959 million, while free cash flow stood at $5,322 million, reflecting ongoing capital expenditures and divestment proceeds.
- Capital Expenditure and Operating Expenses: Cash capital expenditure was $4,175 million, while operating expenses and underlying operating expenses were $8,575 million and $8,453 million, respectively, both showing a moderate decrease from the previous quarter.
- Return on Average Capital Employed (ROACE): ROACE was 10.4%, down from 12.0% a year ago, indicating some pressure on returns.
- Debt and Gearing: Net debt rose to $41,521 million from $38,809 million in Q4 2024, with gearing increasing to 18.7%. The rise in net debt was attributed to free cash flow being offset by share buybacks, dividend payments, lease additions, and interest payments.
- Production and Earnings Per Share: Oil and gas production available for sale averaged 2,838 thousand barrels of oil equivalent per day. Basic earnings per share rebounded to $0.79, while adjusted earnings per share were $0.92.
- Dividend: The dividend per share remained steady at $0.3580.
Quarter Analysis
Shell’s Q1 2025 results reflect a substantial recovery in profitability from the previous quarter, largely due to operational efficiencies and improved product margins.
The company managed to contain operating expenses and benefited from lower exploration write-offs. However, compared to the same period last year, profits and returns remain under pressure, highlighting the impact of weaker crude prices and higher costs across the industry.
The company’s cash flow from operations was affected by higher tax payments and working capital outflows, while net debt and gearing increased, mainly due to continued shareholder returns through buybacks and dividends, as well as strategic acquisitions.
Despite ongoing macroeconomic challenges and volatility in energy markets, Shell’s disciplined capital allocation and focus on operational efficiency have positioned it to navigate industry headwinds.
The steady dividend and continuation of the share buyback program underline Shell’s commitment to shareholder returns.