3,823 3,623 3,845 -1 Chemicals sales volumes (thousand tonnes) 11,318 11,769 -4 ------- ------- ------- -------- --------------------------------------------------------- -------- -------- ------- 1. Q3 on Q3 change. 2. Earnings are presented on a CCS basis (see Note 2). Third quarter segment earnings were $131 million, which reflected lower realised margins due to a weak price environment compounded by the COVID-19 pandemic compared with the third quarter 2019. This was offset by favourable deferred tax movements. Segment earnings included a charge of $104 million mainly due to a legal provision, which is part of identified items (see Reference A). Compared with the third quarter 2019, Chemicals Adjusted Earnings of $227 million reflected lower realised margins due to a weak price environment compounded by the COVID-19 pandemic. This was offset by favourable deferred tax movements. Cash flow from operating activities for the quarter was $335 million, primarily driven by Adjusted Earnings before depreciation and partly offset by negative working capital movements. With effect from January 1, 2020, Shell discloses utilisation instead of availability to improve transparency on chemicals production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Chemicals manufacturing plant utilisation was 80% compared with 78% in the third quarter 2019, mainly due to a higher level of maintenance activities in 2019. Nine Months segment earnings were $441 million, which reflected lower realised margins due to a weak price environment compounded by the COVID-19 pandemic compared with the first nine months of 2019. Segment earnings included a charge of $104 million due to a legal provision and redundancy and restructuring costs of $28 million. These net charges are part of identified items (see Reference A). Compared with the first nine months of 2019, Chemicals Adjusted Earnings of $581 million reflected lower realised margins due to a weak price environment compounded by the COVID-19 pandemic. Cash flow from operating activities for the first nine months of 2020 was an inflow of $891 million, primarily driven by Adjusted Earnings before depreciation. This was partly offset by cost-of-sales adjustments for the first nine months of 2020. With effect from January 1, 2020, Shell discloses utilisation instead of availability to improve transparency on chemicals production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Chemicals manufacturing plant utilisation was 81% compared with 78% in the first nine months of 2019, mainly due to higher maintenance activities in Asia and Europe in 2019, including the impact of strike actions in the Netherlands last year. Page 10 ROYAL DUTCH SHELL PLC 3RD QUARTER 2020 UNAUDITED RESULTS --------------------------------------- CORPORATE Quarters $ million Nine Months Q3 2020 Q2 2020 Q3 2019 2020 2019 (739) (805) (663) Segment earnings (1,998) (2,122) 52 (9) 154 Of which: Identified items (Reference A) 578 185 (792) (796) (817) Adjusted Earnings (2,576) (2,307) 514 (791) 375 Cash flow from operating activities 282 (276) (33) 390 (80) Cash flow from operating activities excluding working 118 (265) capital movements (Reference H) ------- ------- ------- ----------------------------------------------------------- --------- --------- Third quarter segment earnings were an expense of $739 million. This included a gain of $48 million from the impact of the weakening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were an expense of $792 million, reflecting higher operating expenses, largely offset by favourable currency exchange rate effects and higher tax credits, compared with the third quarter 2019. Nine Months segment earnings were an expense of $1,998 million. This included a gain of $578 million from the impact of the weakening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were an expense of $2,576 million, reflecting adverse currency exchange rate effects and lower interest expenses, compared with the first nine months of 2019. OUTLOOK FOR THE FOURTH QUARTER 2020 As a result of COVID-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products. Furthermore, global developments and uncertainty in oil supply have caused volatility in 2020 in commodity markets. The fourth quarter 2020 outlook provides ranges for operational and financial metrics based on current expectations, but these are subject to change in the light of current evolving market conditions. Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics. Integrated Gas production is expected to be approximately 830 - 870 thousand boe/d. LNG liquefaction volumes are expected to be approximately 7.9 - 8.5 million tonnes. Upstream production is expected to be approximately 2,300 - 2,500 thousand boe/d. Refinery utilisation is expected to be approximately 69% - 77%. Oil Products sales volumes are expected to be approximately 4,000 - 5,000 thousand b/d. Chemicals manufacturing plant utilisation is expected to be approximately 77% - 85%. Chemicals sales volumes are expected to be approximately 3,500 - 3,900 thousand tonnes. Corporate Adjusted Earnings are expected to be a net expense of approximately $800 - $875 million in the fourth quarter 2020 and a net expense of approximately $3,200 - $3,500 million for the full year 2020. This excludes the impact of currency exchange rate effects. Page 11 ROYAL DUTCH SHELL PLC 3RD QUARTER 2020 UNAUDITED RESULTS --------------------------------------- FORTHCOMING EVENTS Fourth quarter 2020 and full year results and dividends are scheduled to be announced on February 4, 2021. First quarter 2021 results and dividends are scheduled to be announced on April 29, 2021. Second quarter 2021 and half year results and dividends are scheduled to be announced on July 29, 2021. Third quarter 2021 results and dividends are scheduled to be announced on October 28, 2021. The Shell Strategy Day is scheduled to take place on February 11, 2021. Page 12 ROYAL DUTCH SHELL PLC 3RD QUARTER 2020 UNAUDITED RESULTS --------------------------------------- UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME Quarters $ million Nine Months Q3 2020 Q2 2020 Q3 2019 2020 2019 44,021 32,504 86,592 Revenue(1) 136,554 260,871 461 (161) 769 Share of profit of joint ventures and associates 1,154 2,885 234 148 2,180 Interest and other income 458 3,285 44,717 32,491 89,541 Total revenue and other income 138,167 267,041 27,276 18,093 63,900 Purchases 88,582 192,413 5,496 5,822 6,002 Production and manufacturing expenses 17,299 19,191 2,366 2,370 2,429 Selling, distribution and administrative expenses 7,130 7,662 233 232 219 Research and development 708 656 222 723 644 Exploration 1,239 1,389 7,689 28,089 6,815 Depreciation, depletion and amortisation(2) 42,871 19,464 992 1,070 1,161 Interest expense 3,181 3,572 44,275 56,398 81,169 Total expenditure 161,009 244,346 442 (23,907) 8,372 Income/(loss) before taxation (22,842) 22,695 (104) (5,806) 2,348 Taxation charge/(credit) (5,265) 7,351 546 (18,101) 6,024 Income/(loss) for the period(1) (17,578) 15,344 57 30 145 Income/(loss) attributable to non-controlling interest 88 466 Income/(loss) attributable to Royal Dutch Shell plc 489 (18,131) 5,879 shareholders (17,666) 14,878 0.06 (2.33) 0.73 Basic earnings per share ($)(3) (2.27) 1.84
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