Shell’s expected cash delivery creates the potential to distribute $125bn to shareholders over 2021-2025

Shell’s expected cash delivery creates the potential to distribute $125bn to shareholders over 2021-2025
Published: 5 June 2019 - 6 a.m.
By: Martin Menachery
Royal Dutch Shell plc (Shell) updated investors on the company’s strategy, setting out a compelling financial outlook to 2025 and building on a strong foundation that will enable it to thrive through the transition to a lower-carbon energy system.

“We have reshaped our company with a focus on value and have demonstrated a clear track record of delivering on our ambitious promises made at our Management Day in November 2017,” said Royal Dutch Shell plc chief executive officer, Ben van Beurden. “It is the success of our strategy and strength of our delivery today that gives us confidence for the future.”

Van Beurden summed up the key points of the company’s update: “Increased organic free cash flow outlook, greater potential distributions to shareholders and confidence in our world-class investment case given our high-margin portfolio, improving returns and a globally recognised brand.”

Downstream continues to deliver strong financial performance due to highly integrated refining, trading and marketing operations, premium products, as well as competitive growth in the chemicals business. Strong brand and customer reach will continue to be a differentiator for Shell and underpin growth in its downstream businesses.

Shell plans to: (i) fully sustain the upstream business through the next decades, and grow the company’s market-facing businesses; (ii) increase organic free cash flow to around $35bn in 2025 at $60 per barrel (real terms, 2016); (iii) achieve a return on average capital employed of more than 12% in 2025; (iv) maintain gearing of 15-25% through the cycle; and (v) invest, on average, $30bn of cash capex a year over 2021-2025 (excluding major inorganic opportunities, but including minor acquisition spend of up to $1bn), with a ceiling of $32bn a year.

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