Shell (LSE:SHEL) reported fourth-quarter 2025 income attributable to shareholders of $4.1 billion, representing a significant increase year-on-year but a decline compared with the previous quarter. The quarter-on-quarter reduction reflected unfavourable tax adjustments, lower marketing margins, reduced realised commodity prices and higher operating costs.
Adjusted earnings dropped 40% compared with the prior quarter and declined 22% for the full year to $18.5 billion. Adjusted EBITDA also fell 15% to $56.1 billion, primarily due to weaker liquids and liquefied natural gas prices, softer trading and optimisation performance, and reduced chemicals margins. These pressures were partly offset by stronger production volumes, lower operating costs and supportive tax impacts.
Shell generated operating cash flow of $9.4 billion during the fourth quarter and $42.9 billion for the full year. Annual free cash flow reached $26.1 billion after capital expenditure of $20.9 billion. Net debt increased to $45.7 billion, with gearing rising to 20.7%, largely reflecting strong shareholder distributions.
The company returned $5.5 billion to shareholders during the fourth quarter through a combination of dividends and share buybacks. Shell also announced a new $3.5 billion share repurchase programme, reinforcing its commitment to returning capital to investors despite softer earnings and cash flow compared with 2024.
Strategically, Shell highlighted $5.1 billion in structural cost savings achieved since 2022 and continued investment across its portfolio. The company recently approved final investment decisions for Australia’s Gorgon Stage 3 integrated gas development and Nigeria’s HI gas project, supporting future growth in upstream production and LNG capacity despite a weaker pricing and margin environment.
Shell’s outlook reflects a stable financial position supported by strong operating margins and a resilient balance sheet. Attractive valuation metrics and positive investor sentiment following recent results provide additional support. However, technical trading indicators suggest potential short-term weakness, while slower revenue and cash flow growth remain key risks to monitor.
More about Shell
Shell plc is a global energy company operating across the oil, natural gas and liquefied natural gas value chains, alongside expanding investments in electricity and lower-carbon energy solutions. The company produces, processes and trades hydrocarbons, supplies fuels and lubricants globally, and continues to develop integrated gas, chemicals and cleaner energy projects to serve industrial, commercial and retail customers worldwide.
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