Shell’s profit beats expectations at $6.9 billion, raises dividend by 5%

May 7 (Reuters) – Shell’s first-quarter profit beat estimates and hit its highest in two years at $6.9 ‌billion on Thursday, boosted by gains linked to the Middle East war, prompting it to raise the dividend by 5%.

At the same time, it cut its quarterly share buyback programme to $3 billion from $3.5 billion to preserve cash for its balance sheet as a short-term liquidity squeeze after war-related energy ​supply disruption increased its debt.

“It really reflects that confidence we have in the long-term cash flows of the ​company,” Shell’s Chief Financial Officer Sinead Gorman said on a call with reporters of the dividend ⁠hike, adding she still felt Shell shares were undervalued. She said she had reduced the buybacks to allocate cash to ​the balance sheet.

Shell had previously exceeded its shareholder distribution target of 40% to 50% of operational cash flow, and Citi analyst ​Alastair Syme said the 8% year-on-year cut in payouts from the dividend-buyback rebalancing should have come earlier.

Oil majors typically use buybacks as a flexible tool, while dividends are rarely cut. Shell cut its dividend for the first time since World War Two in 2020 during the COVID-19 pandemic.

This mirrors strong oil trading at European peers BP and TotalEnergies, which have benefited from price volatility more than their U.S. rivals.

Shell’s oil and gas output fell 4% from the previous quarter, mainly due ​to outages in Qatar after ​damage to part of its Pearl ⁠gas-to-liquids plant in the conflict that began at the end of February. Repairs may take about a year.

For the second quarter, Shell expects integrated gas production to drop up to 36% ​due to the conflict’s impact, including in Qatar. LNG liquefaction volumes are expected to fall ​by up to ⁠14%.

CFO SAYS SHE IS HAPPY WITH BALANCE SHEET DESPITE DEBT

Shell’s gearing, or debt-to-equity ratio including leases, rose to 23.2% from 20.7% at the end of 2025, reflecting higher debt linked to price swings and supply disruptions.

Gorman said she was very happy with the balance sheet.

Cash ⁠flow from ​operating activities was $6.1 billion, hit by large swings in inventory values that ​pushed working capital – a liquidity measure of current assets minus liabilities – to minus $11.2 billion.

Shell expects working capital movements to reverse over time if oil and gas ​prices ease.