British oil major Shell reported its weakest quarterly profit in nearly five years on Thursday, weighed down by lower crude prices, weaker chemicals margins and unfavourable tax adjustments, but kept shareholder returns intact by maintaining its share buyback programme.
Shell posted adjusted earnings of US$3.26 billion for the fourth quarter of 2025, falling short of analyst expectations of about US$3.5 billion, according to consensus estimates compiled by LSEG. The result marked the company’s weakest quarterly performance since the first quarter of 2021, when earnings stood at US$3.2 billion.
For the full year, Shell reported adjusted earnings of US$18.5 billion, down sharply from US$23.72 billion in 2024 and also below market expectations, highlighting the pressure facing global energy companies amid a softer oil price environment.
Despite the weaker results, the London-headquartered group announced it would maintain its quarterly share buyback at US$3.5 billion and raise its dividend by 4 percent to US$0.372 per share. The move extends Shell’s run of shareholder payouts, marking the 17th consecutive quarter in which it has returned at least $3 billion through buybacks.
Chief Executive Wael Sawan sought to reassure investors, describing the quarter as operationally strong despite the headline profit decline.
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“I’d start off by saying it was actually a very strong operational quarter for us,” Sawan told CNBC. “A few things hurt us this quarter. Number one was some tax adjustments which went against us, chemicals has indeed been weak, but I would look to the strength actually of our integrated gas, upstream and marketing businesses.”
Shell said its integrated gas and upstream operations continued to deliver resilient cash flows, helping to offset weakness in its chemicals division, which has been hit by global overcapacity and subdued demand.
The company’s balance sheet showed some deterioration. Net debt rose to US$45.7 billion at the end of 2025, up from US$41.2 billion at the end of the third quarter, while gearing increased to 20.7 percent from 18.8 percent. Shell attributed the rise partly to working capital movements and shareholder distributions.
Shares in Shell fell around 1.8 percentin early London trading following the results, although the stock remains up about 3.6 percent so far this year.
The results come at a time when European energy majors are under growing pressure as lower oil prices threaten cash flows and shareholder returns. Brent crude prices averaged significantly lower in the second half of 2025 compared with the previous year, squeezing margins across the sector.
Industry peers have already begun to adjust. Norway’s state-backed Equinor on Wednesday cut its share buyback programme sharply after reporting a 22 percent drop in fourth-quarter profit. Equinor said it would reduce buybacks to US$1.5 billion in 2026, down from $5 billion last year, and scale back investments in renewables and low-emission energy projects.
Against that backdrop, Shell’s decision to maintain buybacks underscores management’s commitment to capital discipline and investor returns, even as earnings weaken.
Sawan, who took the helm about three years ago, said improving performance and returns remained a priority. He pointed to the deployment of artificial intelligence, supply chain efficiencies and tighter cost controls as areas where Shell sees further upside.
“As I look ahead, we still see a lot of opportunities to be able to actually improve our performance,” he said. “But there are also opportunities to actually enhance the returns. You will see us continue to be consistent in our return of capital and continue to drive an improvement in our return on capital.”
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Shell has in recent years narrowed its strategic focus, prioritising its most profitable businesses such as liquefied natural gas, deepwater oil and marketing, while pulling back from some renewable energy investments that delivered weaker returns.
Investors will now turn their attention to upcoming earnings from other European oil majors. Britain’s BP and France’s TotalEnergies are both due to report fourth-quarter results next week, with analysts watching closely for any changes to dividend or buyback policies amid the tougher market conditions.
For Shell, the challenge will be balancing shareholder expectations with the need to manage debt levels and fund long-term investments, as the company navigates a period of lower prices and heightened uncertainty in global energy markets.
