Shell share price under pressure, dividend maintained amid Covid-19 outbreak
The oil and gas major has seen its shares come under pressure as a result of the coronavirus outbreak but has managed to maintain its dividend.
Royal Dutch Shell shares found support on Monday after it unveiled a series of cost cutting measures amid the economic fallout from COVID-19.
Despite the measures, the oil giant still managed to preserve its dividend, one of its longstanding priorities, helping the stock rally 4% on Monday.
Shell is trading at £11.09 a share as of 14:45 (GMT).
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Shell cuts costs to protect balance sheet
The oil and gas major told investors that it plans to generate $8 - $9 billion in free cash flow by dramatically reducing its operating costs, capital spending and working capital requirements in a bid to offset the economic impact of the Covid-19 outbreak.
‘As well as protecting our staff and customers in this difficult time, we are also taking immediate steps to ensure the financial strength and resilience of our business,’ Shell CEO Ben van Beurden said. ‘The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past.’
‘In these very tough conditions, I am very proud of our staff and contractors across the world for maintaining their focus on safe and reliable operations while also ensuring their own health and welfare and that of their families, communities and our customers,’ he added.
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Shell acts to offset Covid-19 outbreak
Due to the coronavirus threat, Shell remains committed to its divestment programme, with it hoping to raise around $10 billion from the sale of assets in 2019/20.
However, the company admits that conducting sale processes amid the outbreak poses a significant challenge, with corporates concerned about the impact of the virus on their performance.
Divestments of around $5 billion of assets were completed in 2019.
Shell said that it will no longer continue with the next tranche of its share buyback programme, with the company regularly reviewing its strategic priorities due to the Covid-19 outbreak.
'In the current environment, Shell’s financial resilience is fundamental to continued investment in our strategic priorities,’ the company said.
‘Shell seeks to maintain strong financial credit metrics and ensure it has a robust balance sheet to manage volatility.’
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