Pandemic causes Shell to book largest loss ever

Shell has booked its largest-ever loss of USD 21.7 billion as a result of the corona crisis. Large write-offs during the first lockdown already resulted in the largest quarterly loss in the company’s history. Shell was unable to make up for that and in the fourth quarter, fell into the red again. 

The 2020 annual result shows a stark contrast with the year before when the British-Dutch coil major still made a profit of USD 15.8 billion.

Shell suffered greatly from the fact that fewer planes were flying, fewer cars were driving and the industry overall was in a lower gear. As a result, there was less demand for oil and gas and oil prices temporarily collapsed. For the first time in history, traders actually paid to be able to deliver their oil to someone.

The oil markets did show signs of recovery and in many countries, new lockdowns were announced. This further depressed fuel sales and led to lower margins on refinery products. As a result, the company suffered a loss of some USD 4 billion in the fourth quarter, which was significantly worse than what analysts had generally expected.

Job cuts

The corona crisis had already forced Shell to take drastic measures. For the first time since the Second World War, the dividend to shareholders was reduced. In addition, Shell announced global job cuts of 7,000 to 9,000, roughly one-tenth of the total workforce.

“2020 was an extraordinary year”, comments CEO Ben van Beurden. He says Shell took “tough but decisive measures” and, despite everything, managed to close the year with a stronger balance sheet. He also emphasised that Shell is committed to increasing the dividend again. For the first quarter of this year, Van Beurden foresees about 4% more payout per share.

Author: Tobias Pieffers

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