Oil major Shell slashes dividend as first-quarter net profit falls 46%

Oil giant Royal Dutch Shell reported a 46% fall in net profit for the first quarter and reduced its dividend Thursday, following a dramatic slide in oil prices amid the coronavirus crisis.

Net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items, which is used as a proxy for net profit, came in at $2.9 billion for the first quarter of 2020. That compared with $5.3 billion in the first quarter of 2019.

Analysts polled by Refinitiv had expected first-quarter net profit to come in at $2.5 billion for the quarter.

The board at Shell said it had decided to reduce the oil major’s first-quarter dividend to $0.16 per share, down from $0.47 at the end of 2019. That’s a reduction of 66%.

“Shareholder returns are a fundamental part of Shell’s financial framework,” Chad Holliday, chair of the board of Royal Dutch Shell, said in a statement.

“However, given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the Board believes that maintaining the current level of shareholder distributions is not prudent.”

Shares of Shell have fallen more than 34% since the start of the year.

The energy giant’s results come shortly after a historic plunge in oil prices. The May contract of U.S. West Texas Intermediate plunged below zero to trade in negative territory for the first time in history last week. Trading volume was thin given it was the day before the contract’s expiration date, but, nonetheless, the move lower was extraordinary.

WTI futures had fetched more than $60 a barrel at the start of the year. A dramatic fall-off in demand as a result of the coronavirus outbreak has sent oil prices tumbling.

On Thursday, the June contract of WTI traded at $17.20 per barrel, more than 14% higher for the session, while international benchmark Brent crude stood at $24.75, up around 10%.

Earlier this week, BP reported first-quarter net profit had fallen 67% compared to the same period a year earlier.

Speaking shortly after the U.K. oil and gas company made its earnings public on Tuesday, BP CEO Bernard Looney said market conditions through the first three months of the year had been “brutal.”