What do you make of Shell’s first quarter results for 2006?
The results were robust, despite some operational challenges that we faced.
Current cost of supplies (CCS) earnings of $6bn (£3.24bn) were up 12% and
earnings per share on a CCS basis were $0.94 and up 15%. Cash flow from
operations was once again more than $9bn. We are comfortable with these results
and with our operating performance. The first quarter dividend of €0.25 (£0.17)
per share was up 9%.
In light of these strong results, what is your financial
We are focused on superior cash generation to fund growth and returns and
discipline to reinvestment and competitive costs. Our strategy is based on
robust project economics. Our cash priorities are dividends and capital
expenditure to deliver growth. Our 2005 profitability and cash flow growth was
extremely competitive and these trends continue into the first quarter of 2006.
We look at a range of financial measures, but focus on high returns and strong
cash generation. We intend to maintain growth spending rather than the start and
stop approach which sometimes diminished our progress in the past.
How does this influence your dividend policy?
Our policy is unchanged. We aim for euro dividend growth at least in line
with inflation. We intend to pay competitive dividends in the future. With
continuing high oil prices and robust cash flows we expect our 2006 share
buybacks to exceed the announced $5bn. And we expect buybacks to continue
subject to market conditions and our capital needs.
How do these shareholder returns compare to those of your sector
Looking at our competitive position we have the best record on dividend
payout ratio in our peer group. The 2005 payout was over $17bn including the
payment to minority shareholders. This compares with a $15.6bn of capital
spending and underlies our continuing commitment to shareholders. We are clearly
competitive on total payout when combining dividends and share buybacks.
What are your plans for investment in capital expenditure?
We are planning $19bn of organic spending in 2006. Let me be clear, we could
spend more, but we will only do so when investments meet our portfolio and
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