Shell Reports Weakest Quarterly Profit in Five Years
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Should l Buy BP?
Source: CNBC
- Quarterly Profit Decline: Shell reported adjusted earnings of $3.26 billion for Q4, missing analyst expectations of $3.53 billion, indicating significant profit pressure due to a weaker crude price environment and unfavorable tax adjustments, marking the lowest quarterly performance since Q1 2021.
- Weak Annual Performance: For the full year 2025, Shell's adjusted earnings were $18.5 billion, a notable decline from $23.72 billion the previous year, reflecting the challenges of the market environment and weakening profitability, which may impact future investment decisions.
- Shareholder Return Initiatives: The company announced a 4% increase in its dividend to $0.372 per share and initiated a $3.5 billion share buyback program, marking the 17th consecutive quarter of buybacks exceeding $3 billion, aimed at boosting shareholder confidence and stabilizing stock prices.
- Rising Debt Levels: As of the end of last year, Shell's net debt stood at $45.7 billion with a gearing ratio of 20.7%, an increase from $41.2 billion and 18.8% in Q3, indicating financial pressure amidst declining earnings.
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Analyst Views on BP
Wall Street analysts forecast BP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BP is 84.26 USD with a low forecast of 6.38 USD and a high forecast of 503.69 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
5 Buy
5 Hold
1 Sell
Moderate Buy
Current: 38.170
Low
6.38
Averages
84.26
High
503.69
Current: 38.170
Low
6.38
Averages
84.26
High
503.69
About BP
BP p.l.c. is a United Kingdom-based integrated energy company. The Company's segments include Gas & low carbon energy, Oil production & operations, Customers & products, and Other businesses & corporate. Its gas business includes regions with upstream activities that produce natural gas, integrated gas and power, and gas trading. Its low carbon business includes solar, offshore and onshore wind, hydrogen and carbon capture and storage and power trading. Oil production & operations segment comprises regions with upstream activities that predominantly produce crude oil, including bpx energy. Customers & products segment comprises its customer-focused businesses, which include convenience and retail fuels, electric vehicle charging, as well as Castrol, aviation and business to business and midstream. It also includes its products businesses, refining and oil trading, as well as its bioenergy businesses. Other businesses & corporate segment comprises technology and bp ventures.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Union Leadership Statement: USW 7-1 President Eric Schultz stated that while workers are ready to strike, the union will continue to bargain in good faith, emphasizing the importance of unity in demanding a fair contract for all members.
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- Contract Context: The Kirkuk development contract signed last year is a key part of BP's efforts to boost earnings, with annual costs projected at approximately $1 billion over the 25-year contract period, significantly impacting BP's long-term financial performance.
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Shell Reports Weakest Quarterly Profit in Five Years
- Quarterly Profit Decline: Shell reported adjusted earnings of $3.26 billion for Q4, missing analyst expectations of $3.53 billion, indicating significant profit pressure due to a weaker crude price environment and unfavorable tax adjustments, marking the lowest quarterly performance since Q1 2021.
- Weak Annual Performance: For the full year 2025, Shell's adjusted earnings were $18.5 billion, a notable decline from $23.72 billion the previous year, reflecting the challenges of the market environment and weakening profitability, which may impact future investment decisions.
- Shareholder Return Initiatives: The company announced a 4% increase in its dividend to $0.372 per share and initiated a $3.5 billion share buyback program, marking the 17th consecutive quarter of buybacks exceeding $3 billion, aimed at boosting shareholder confidence and stabilizing stock prices.
- Rising Debt Levels: As of the end of last year, Shell's net debt stood at $45.7 billion with a gearing ratio of 20.7%, an increase from $41.2 billion and 18.8% in Q3, indicating financial pressure amidst declining earnings.
See More
Shell CEO Exceeds Expectations in Three Years of Leadership
- Earnings Beat: Shell has exceeded earnings expectations in five of the last eight quarters, notably reporting $5.4 billion in Q3 last year, surpassing the $5.1 billion forecast, highlighting its operational resilience amid falling oil prices.
- Share Buyback Program: The company has announced over $3 billion in share buybacks for 16 consecutive quarters, establishing itself as a best-in-class performer in capital discipline, despite the challenges posed by declining crude prices.
- Cost Control Targets: Shell raised its cost reduction target from $2-3 billion to $5-7 billion by 2028 and lowered its capital expenditure target from $22-25 billion to $20-22 billion, indicating a strong focus on maintaining financial health in a volatile market.
- Investment Enthusiasm in Nigeria: Shell's investments in Nigeria have reached $5 billion, including the Bonga North deepwater project and HI gas field, reflecting a strategic pivot towards the region that could enhance its global energy market position.
See More
Key Earnings Reports and Economic Outlook This Week
- DuPont Earnings Expectations: DuPont is expected to report earnings of $0.43 per share and revenue of $1.69 billion for Q4 2025, with analysts noting ongoing pressure in short-cycle businesses, while slight improvements in the automotive sector may influence investor sentiment.
- Cisco's AI Focus: Cisco anticipates earnings of $1.02 per share and revenue of $15.1 billion for Q2 FY2026, with CEO highlighting a major multi-year campus networking refresh, making AI infrastructure demand a critical growth driver.
- Importance of Employment Report: The January employment report is expected to show an addition of 80,000 nonfarm payrolls and an unchanged unemployment rate of 4.4%, directly impacting private consumption and U.S. GDP, making it crucial for investors to monitor.
- Consumer Price Index Insights: The January CPI is projected to increase by 2.5% year-over-year, with core CPI rising by 2.6%, providing essential inflation details despite not being the Fed's preferred measure, particularly regarding persistent shelter cost inflation.
See More
Key Focus Areas This Week: Jobs, Consumer Prices, Coca-Cola, CVS, Ford, McDonald's, and More
- Market Performance: The Dow Jones Industrial Average rose by 2.5% and closed above 50,000 for the first time.
- Nasdaq Struggles: In contrast, the Nasdaq Composite ended the week down 1.8%, despite a strong rally on Friday.
See More
United Steelworkers Prepare for Strike at BP's Whiting Refinery
- Strike Authorization Vote: Following unsuccessful negotiations with BP, 98% of the 800 workers represented by the local USW union voted to authorize a strike, reflecting strong dissatisfaction and a demand for a fair contract.
- Negotiation Breakdown: Negotiations that began on January 5 failed to reach a new agreement by the January 31 deadline, as BP rejected nearly all proposals, leaving workers anxious about job security and future terms.
- Union Leadership Statement: USW 7-1 President Eric Schultz stated that while workers are ready to strike, the union will continue to bargain in good faith, emphasizing the importance of unity in demanding a fair contract for all members.
- Refinery Impact: BP's Whiting refinery in Indiana, the largest in the U.S. Midwest with a capacity of 440,000 barrels per day, produces essential transportation fuels including gasoline, diesel, and jet fuel, and a strike could significantly disrupt fuel supply.
See More
BP Seeks Partner to Boost Kirkuk Oil Field Production
- Partner Search: BP is actively seeking a partner to enhance production at the Kirkuk oil field and share costs, with a process underway to identify potential investors, which will help alleviate BP's financial burden and improve project sustainability.
- Contract Context: The Kirkuk development contract signed last year is a key part of BP's efforts to boost earnings, with annual costs projected at approximately $1 billion over the 25-year contract period, significantly impacting BP's long-term financial performance.
- Middle East Strategy: The Middle East is one of BP's top-producing regions; in addition to Kirkuk, BP operates Iraq's largest oil field, Rumaila, in the south, further solidifying BP's market position in the region.
- Production Increase Plan: BP's plan to nearly double Kirkuk's production aligns with Iraq's ambition to raise its overall oil and gas output capacity to over 6 million barrels per day by 2029, highlighting BP's proactive role in the global energy market.
See More
Shell Reports Weakest Quarterly Profit in Five Years
- Quarterly Profit Decline: Shell reported adjusted earnings of $3.26 billion for Q4, missing analyst expectations of $3.53 billion, indicating significant profit pressure due to a weaker crude price environment and unfavorable tax adjustments, marking the lowest quarterly performance since Q1 2021.
- Weak Annual Performance: For the full year 2025, Shell's adjusted earnings were $18.5 billion, a notable decline from $23.72 billion the previous year, reflecting the challenges of the market environment and weakening profitability, which may impact future investment decisions.
- Shareholder Return Initiatives: The company announced a 4% increase in its dividend to $0.372 per share and initiated a $3.5 billion share buyback program, marking the 17th consecutive quarter of buybacks exceeding $3 billion, aimed at boosting shareholder confidence and stabilizing stock prices.
- Rising Debt Levels: As of the end of last year, Shell's net debt stood at $45.7 billion with a gearing ratio of 20.7%, an increase from $41.2 billion and 18.8% in Q3, indicating financial pressure amidst declining earnings.
See More
Shell CEO Exceeds Expectations in Three Years of Leadership
- Earnings Beat: Shell has exceeded earnings expectations in five of the last eight quarters, notably reporting $5.4 billion in Q3 last year, surpassing the $5.1 billion forecast, highlighting its operational resilience amid falling oil prices.
- Share Buyback Program: The company has announced over $3 billion in share buybacks for 16 consecutive quarters, establishing itself as a best-in-class performer in capital discipline, despite the challenges posed by declining crude prices.
- Cost Control Targets: Shell raised its cost reduction target from $2-3 billion to $5-7 billion by 2028 and lowered its capital expenditure target from $22-25 billion to $20-22 billion, indicating a strong focus on maintaining financial health in a volatile market.
- Investment Enthusiasm in Nigeria: Shell's investments in Nigeria have reached $5 billion, including the Bonga North deepwater project and HI gas field, reflecting a strategic pivot towards the region that could enhance its global energy market position.
See More
