That the stock of Royal Dutch Shell (WKN: A0ER6S) has operational problems, most investors are now well aware of this. The low oil prices were a burden, particularly in the second quarter. But not only since then.
No, basically the entire stock market year 2020 is already characterized by low prices by Brent and WTI. In addition to the corona virus, the reasons for this are the oil flood caused by OPEC +. This has brought the market out of whack.
However, we already saw the extent in the first quarter, where Royal Dutch Shell just remained in the profit zone. However, the dividend has already been cut. However, there were signs of adversity in the second quarter when depreciation was announced.
But is the second quarter really that bad? Let’s take a foolish look at the new quarterly numbers today to find out exactly.
The numbers at a glance!
As Royal Dutch Shell has now announced, the second quarter ended with a large loss of $ 18.1 billion. The previously announced amortization was approximately $ 16.8 billion. This in turn is emblematic of this mixed reporting period.
On an adjusted basis, the UK-Dutch oil and gas group even remained profitable with a profit of $ 638 million. Wow. However, this of course also corresponds to a significant slump compared to the previous year.
It is also noteworthy that Royal Dutch Shell appears to have used the low oil price phase for active trading. Accordingly, the Oil Products Refining & Trading segment would have generated a positive result of $ 1.9 billion. This in turn seemed to have prevented an even worse performance. It is remarkable what crisis mechanisms Royal Dutch Shell is ready to face in challenging times.
The dividend, however, remains at $ 0.16 per share. At least something: Because some investors may have speculated in advance that the poor second quarter could lead to a lowering of this already lower dividend level.
Findings from the second quarter
Finally, there remains the question of what insights investors can draw from this very mixed reporting period. It is important to think in different directions again and to see the positive as well as the negative.
It could be positive, for example, that Royal Dutch Shell actually managed this challenging period quite solidly. The net loss is huge, no question. However, it was primarily depreciation that had a negative impact. Otherwise, the moderate disaster has actually failed to materialize. Especially now that the bottom of the valley could be passed. The Brent barrel is finally back above the $ 40 a barrel mark. That could bring some relaxation in the third quarter.
However, and investors should not forget that: Royal Dutch Shell has now slipped into the red due to external influences such as OPEC and the low oil price. The dependency will continue to exist. However, maybe a bit reduced. Finally, the management would like to invest in an electricity sector, which is expected to make up around a third of the entire group. Plans that could initially be put on hold due to low oil prices.
Overall, investors should consider whether Royal Dutch Shell as an overall package is attractive. In any case, the dividend has been reduced. The dependence on oil and natural gas still exists. The second quarter showed how painful this can sometimes be.
The post Royal Dutch Shell after loss of billions: What now with the former dividend pearl ?! appeared first on The Motley Fool Germany.
Vincent owns shares in Royal Dutch Shell. The Motley Fool does not own any of the stocks mentioned.
Motley Fool Deutschland 2020