Posted on 04/30/2020 6:28:17 AM PDT by MeneMeneTekelUpharsin
LONDON (Reuters) - Royal Dutch Shell RDSa. cut its dividend for the first time since World War Two on Thursday in a drastic step to preserve cash as it prepares for a protracted slump in demand for oil because of the coronavirus pandemic. The Anglo-Dutch energy company also suspended share buybacks and said it would reduce oil and gas output by about a quarter after its net profit almost halved in the first three months of 2020 to $2.9 billion.
The new measures combined with cuts in capital spending and planned cost reductions announced last month could save Shell almost $30 billion this year to help it weather the crisis and prepare for the transition to low-carbon energy. “We are living through a crisis of uncertainty,” Chief Executive Officer Ben van Beurden said. “If we had not cut the dividend ... we would have been left without options to reposition the company for the recovery and the future.” Shares in Shell had slumped 8.2% in London by 1201 GMT, underperforming rival BP (BP.L) which said on Tuesday it was maintaining its first-quarter dividend.
For years, Shell has taken pride in having never cut its dividend since the 1940s, resisting such a move even during the deep downturns in the oil market of the 1980s. Some investors had called on major oil firms to break the industry taboo around dividends because of the fallout from the health crisis, rather than taking on more debt to maintain payouts. Shell said it would reduce its quarterly dividend to 16 cents per share from 47 cents, which would save it about $10 billion this year if it stays at that level. Shell last changed its dividend at the start of 2014, raising it from 45 cents.
(Excerpt) Read more at reuters.com ...
Boeing just did the same thing. No more $10 dividend each year. Boeing’s claim is at least 5 years before a dividend will be issued. Insider information is at least 10 years before Boeing could possibly issue a dividend, and that’s if the airline industry returns within the next year. Indications are that the germophobe craze will keep airlines down for at least 3 more years.
Granted, it is major news in that it represents one reasonable strategy for corporations to use coming out of this mess.
However, when you say ominously “[i]t is beginning[.],” I am not sure what “It” is. Could you explain in detail?
Equinor was the first, now Shell will cause an avalanche of reductions. its the smart thing to do.
BP, Exxon and others were going into debt to maintain their dividend. The Boeing strategy just do not seem very smart in the context of the worst oil crash in 100 years.
Keep the company alive to prosper in the future. Shareholders should be happy with that.
Not going to do that. Think about it.
“However, when you say ominously “[i]t is beginning[.],” I am not sure what “It” is. Could you explain in detail?”
It honestly doesnt mean anything. It’s just some dumb phrase people use on the right WAY too much to try to push something “scary” thing they think is going to happen, that never does.
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