Oil giant Royal Dutch Shell, one of the market’s most reliable income providers, has cut its dividend for the first time in over 70 years. Matthew Partridge reports.
by: Dr Matthew Partridge: 7 MAY 2020Last week Royal Dutch Shell cut its dividend for the first time since World War II, says Anjli Raval in the Financial Times. The payout for the first quarter was slashed from 47 cents to 16. No wonder. Not only did profits for the first three months of the year fall from $5.3bn last year to $2.9bn in 2020, but the oil major thinks that the situation will be “more severe” in the second quarter, with oil prices already down to $24 a barrel. The shares sank by 11% on the news.
The scale of the cut suggests that Shell believes that the crisis isn’t just a short-term event, but will cause “permanent change” in customers’ behaviour, say Anna Edwards and Laura Hurst on Bloomberg. The long-term impact on the way consumers work and travel “could be even more devastating for the industry” than the initial turmoil. Attitudes toward oil have been changing for some time “as the world shifts gradually toward cleaner forms of energy”.
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