Shell Plc (NYSE:SHEL) experienced a noticeable decline in its stock price on Thursday following the disclosure of its Q4 fiscal 2025 results. Although the company delivered operational improvements, underlying financial metrics reflected several challenges during the quarter.
The adjusted earnings per American Depositary Share (ADS) were reported at $1.14, notably exceeding the consensus estimate of 63 cents. However, Shell's overall quarterly profit was the lowest in close to five years. This downturn was primarily influenced by diminished crude oil prices and adverse tax adjustments recognized within the period. According to CNBC’s Thursday report, the latest financial outcome represents Shell’s weakest quarterly earnings since the initial quarter of 2021, during which adjusted earnings totaled $3.2 billion.
CEO Wael Sawan, addressing these results on CNBC’s Squawk Box Europe, highlighted operational resilience despite the financial setbacks. He remarked, "I’d start off by saying it was actually a very strong operational quarter for us. A few factors impacted us negatively this quarter, including unfavorable tax adjustments and underperformance in the chemicals sector. Nonetheless, our integrated gas, upstream, and marketing divisions delivered commendable strength."
Financially, Shell’s revenue for the quarter was $64.09 billion, which fell short of analyst forecasts estimating $64.61 billion. Total adjusted earnings summed to $3.3 billion, marking declines both on a year-over-year and sequential basis. These decreases were attributable to negative tax movements, softer marketing margins, lower realized commodity prices, and escalating operational expenditures.
In terms of liquidity, Shell generated $9.4 billion in cash flow from operations throughout the quarter, underscoring its capacity to fund ongoing investments and shareholder returns even amid profit pressures.
Segment-Specific Performance Analysis
Breaking down segment results, Integrated Gas production increased by 2% sequentially to reach 948,000 barrels of oil equivalent per day (boe/d). Meanwhile, liquefied natural gas (LNG) liquefaction volumes advanced 7% quarter-over-quarter to 7.81 million metric tons.
Commodity price realizations showed a downward trend with liquids prices declining to $55 per barrel from $58 the previous quarter, and gas prices decreasing to $6.8 per thousand standard cubic feet, down from $7.3.
Marketing segment volumes reduced from 2.82 million barrels per day in the prior quarter to 2.70 million barrels daily. Within mobility-related operations, production fell modestly to 1.96 million barrels per day from 2.06 million in the previous quarter. Similarly, lubricants output decreased to 83,000 barrels per day, down from 88,000. The Sectors & Decarbonisation segment also contracted, dropping to 658,000 barrels per day from 681,000 sequentially.
Strategic Commentary and Financial Discipline
CEO Sawan characterized 2025 as a year marked by swift progress and operational momentum for Shell. He noted, "We generated a sizable $26 billion in free cash flow, streamlined our portfolio effectively, and achieved $5 billion in cost savings since 2022. These accomplishments are indicative of robust financial and operational discipline with further improvements expected."
Shareholder returns remained a priority, with total distributions of $5.5 billion in the quarter comprising $3.4 billion in share repurchases and $2.1 billion in dividends. Shell announced a $3.5 billion share buyback program intended to conclude prior to the release of Q1 fiscal 2026 results.
The company also raised its dividend by 4% to 37.2 cents per share, scheduled for payment on March 30 to shareholders of record as of February 20, 2026.
Net debt increased slightly to $45.7 billion at quarter-end from $41.2 billion the previous quarter, with gearing rising to 20.7% from 18.8%.
Outlook for First Quarter 2026 and Capital Allocation
Looking ahead, Shell projects Integrated Gas production within the range of 920,000 to 980,000 boe/d, while LNG liquefaction volumes are expected to lie between 7.4 and 8.0 million metric tons in Q1 2026. Upstream output is forecast at 1.70 to 1.90 million boe/d, complemented by marketing volumes anticipated to be between 2.55 and 2.75 million barrels per day.
Operational utilization rates are estimated at 90% to 98% for refineries and 79% to 87% for chemicals plants during the quarter.
Capital expenditures for the fiscal year 2026 are set to range from $20 billion to $22 billion, reflecting ongoing investments across the company’s portfolio.
Market Reaction
The market responded to the earnings release with Shell shares declining by 2.78%, trading at $76.59 in premarket activity on Thursday, as per Benzinga Pro data.