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Shell's profits slump to 30-month low on weak oil, gas prices

Key Points
  • Shell, the world's second-largest publicly-traded energy company, joins rivals Total and Norway's Equinor in reporting weak results for the quarter.
  • Net income attributable to shareholders in the quarter, based on current cost of supplies (CCS) and excluding identified items, dropped 25% to $3.6 billion from a year ago.
  • Exxon Mobil and Chevron both report on Friday.
Royal Dutch Shell products in Torzhok, Russia.
Andrey Rudakov | Bloomberg | Getty Images

Royal Dutch Shell's second quarter profits slumped to a 30-month low due to lower oil and natural gas prices and refining margins, falling far short of forecasts.

The Anglo-Dutch company reported on Thursday a rise in cash generation — a sign of improving operations — but the drop in profit dents a steady recovery since the end of 2016.

Shell, the world's second-largest publicly-traded energy company, joins rivals Total and Norway's Equinor in reporting weak results for the quarter.

"We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices," Chief Executive Officer Ben van Beurden said in a statement.

Net income attributable to shareholders in the quarter, based on current cost of supplies (CCS) and excluding identified items, dropped 25% to $3.6 billion from a year ago.

That compared with a profit forecast of $4.93 billion, according to a company-provided survey of analysts.

Cash flow, a key measure for the Anglo-Dutch company, rose to $11 billion from $9.5 billion a year ago.

Free cash flow — cash available to pay for dividends and share buybacks — dropped to $6.9 bilion.

Shell has focused on cash generation as a key measure of growth, targeting free cash flow of $25 to $30 billion a year between 2019 and 2021 and as much as $35 billion by 2025.

Rival BP on Tuesday reported stronger-than-expected profit in the quarter, which was largely unchanged from a year earlier, while France's Total and Norway's Equinor both reported sharp falls in earnings.

Exxon Mobil and Chevron both report on Friday.