Dan Coatsworth, head of markets at AJ Bell, said: “Shell had already primed the market to expect bad news in its latest quarterly results but even so, this is a pretty ugly set of numbers for the company – with both earnings and revenue coming in appreciably below analysts’ forecasts.
“While volatility in commodity prices is a fact of life for energy companies, investors may be more concerned by rising operating expenses – something which should be within Shell’s compass to control.
“After an encouraging start to his tenure, with a pivot away from green energy ventures received well by the market, CEO Wael Sawan may come under greater scrutiny as momentum stalls.
“The glare of the spotlight on Sawan is only likely to increase in intensity if Shell looks to boost his pay packet. Having dismissed the idea of a blockbuster merger with BP last year, Sawan needs to demonstrate how he can deliver growth for Shell against a difficult market backdrop.
“Shell is attempting to keep investors on side with a further increase to the dividend and yet another share buyback but, with debt ticking higher, shareholders will know this isn’t sustainable over the longer term without an improvement in the financial performance.
“The sense that Shell is going out on a limb to maintain its generosity to shareholders is reinforced by yesterday’s decision by European rival Equinor to scale back its own buyback programme.”
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