Business Overview
Hague, Netherlands-based Royal Dutch Shell PLC (RDSB) is a global group of petrochemical and energy company, which involves in exploring, producing, refining and marketing oil and natural gas. Royal Dutch Shell PLC, which is incorporated in England and Wales, is the parent company of the Shell group. The group's operations are differentiated into three operating segments: Upstream, Downstream, and Integrated Gas and New Energies. The company has an employee base of around 86,000 employees in over 70 countries globally.

On 31^st October 2019, the company will announce third-quarter 2019 results.

Recent News
In the wake of the drone attacks on Saudi Aramco’s operations in Kingdom of Saudi Arabia, the oil prices have surged internationally, to more than $71 per barrel, which is the highest in last six months, due to Saudi Aramco cutting its oil supply to half. Shell’s trading activity will likely to rise in the coming months and oil is expected to be sold at a higher price than before. Brent crude, which is a price benchmark for Atlantic Basin crude oils, jumped by 10 per cent.

Financial Highlights (H1 FY2019, $ million)

(Source: Quarterly Report, Company Website)

In the first half of 2019, the company’s revenue stood at $174,278 million as compared to $186,000 million in H1 FY2018. The decline in the revenue was driven by a dip in the sales from upstream, downstream and integrated gas businesses in the current period. The total income and the other income were $177,499 million in H1 FY2019 against the $190,382 million in H1 FY2018. The company’s total expenditure reduced to $163,176 million in H1 FY2019 against the $172,405 million in H1 FY2018. The PBT (Profit before tax) was down by 20.33 per cent from $17,977 million in H1 FY2018 to $14,323 million in H1 FY2019. The company’s profit for the year attributable to the RDS shareholders was $8,999 million in H1 FY2019 versus $11,923 million in H1 FY2018. The basic earnings per share for the first half of 2019 stood at $1.11 against the $1.44 in H1 FY2018. The diluted earnings per share for H1 FY2019 was $1.10 versus $1.42 in H1 FY2018.

Dividend
Dividends on RDSB Shares will be paid in pounds sterling at the price of 38.01 pence per B share.

Share Price Performance

Daily Chart as at September-17-19, before the market closed (Source: Thomson Reuters)

On 17th September 2019, RDSB shares were trading at GBX 2,354 at the time of writing before the market close (at 1:20 PM GMT), up by 1.36 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,725.51/GBX 2,142.50. The company’s stock beta was 0.90, reflecting a slightly lower movement of the stock as compared to the benchmark index.

Conclusion
The company has been carefully reviewing its costs and level of investments made to enhance its financial and operational performance. The company expects weak economic growth in some advanced economies in the H2 of the financial year 2019. The Chinese market had shown slow growth due to ongoing trade tensions with the US.

The company carries out the development, engineering, construction and facilities operation and maintenance, and provides training services for the oil and gas industry. Despite week top-line and bottom-line performance, the company has reduced its total expenditure in the first half of the financial year 2019.

New contracts, increasing demand for oil and petroleum products and upstream investment forecast for 2019 could provide new growth opportunities to the company.  The company’s operations may be impacted negatively due to ongoing uncertainly created by Brexit as it will impact the company’s supply chain. The fluctuation in oil and gas prices, risks associated with international operations and stiff competition could also affect its operations.

Over the course of 3 years (FY15 - FY18), the company’s revenue surged from $264,960 million in FY15 to $388,379 million in FY18. Compound annual growth rate (CAGR) stood at 13.59 per cent. The company’s P/E and P/CF multiples are significantly higher as compared to the industry multiple.

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