Shell Q2 Earnings Beat Estimates Despite Profit Drop, Keeps $3.5 Billion Buyback

Shell's Q2 profit fell to $4.26 billion from $5.58 billion in Q1 due to softer prices, but the company beat estimates and maintained its $3.5 billion buyback plan. Integrated gas and upstream earnings dropped 30% and 25%, respectively, but free cash rose by $1.2 billion. Net debt increased to $43.2 billion from $41.5 billion in Q1, but the company's strong marketing division and sustained buyback were justified, according to RBC Capital.

Shell plc reported its second quarter 2025 results, showing a decline in earnings but maintaining its $3.5 billion share buyback program. The company's adjusted earnings for the quarter fell to $4.26 billion, down from $5.58 billion in the first quarter and $6.29 billion in the same period last year. Despite this drop, Shell's earnings exceeded analyst expectations of $3.7 billion.

The reduction in earnings was primarily driven by lower oil and gas prices, weaker trading results, and outage-related losses in its chemicals operations. However, Shell's finance chief Sinead Gorman attributed the strong cash flows to operational performance in a challenging market. The company recorded $11.9 billion in cash flow from operations, down from $13.5 billion a year ago [1].

Shell maintained its pace of share buybacks at $3.5 billion for the quarter, the 15th consecutive quarter of at least $3 billion. The company's shares rose around 3% after the earnings release, outperforming a 0.3% rise in a broader index of European energy companies [1].

Integrated gas and upstream earnings dropped 30% and 25%, respectively, but free cash flow rose by $1.2 billion. Net debt increased to $43.2 billion from $41.5 billion in Q1, but the company's strong marketing division and sustained buyback were justified, according to RBC Capital [2].

Shell's CEO Wael Sawan highlighted the company's position as the world's leading liquefied natural gas (LNG) trader and its strategic focus on LNG sales growth. The company's LNG division was one of the few bright spots in the latest Q2 results, with sales rising from 16.5 megatonnes (MT) in the first quarter to 17.8MT in the second [2].

Shell's buyback program, which is part of a broader plan to return 30–40% of cash flow from operations (CFFO) to shareholders, aligns with a sector-wide trend among European oil majors to prioritize capital efficiency. However, the company's net debt increase and gearing rise suggest that returns are being prioritized over reinvestment in low-carbon infrastructure [3].

References:
[1] Reuters. "Shell profit drops by almost third on lower prices, beats expectations." July 31, 2025. https://www.reuters.com/business/energy/shell-profit-drops-by-almost-third-lower-prices-beats-expectations-2025-07-31/
[2] Gasworld. "Shell LNG sales rise but profits plunge by a third." July 31, 2025. https://www.gasworld.com/story/shell-lng-sales-rise-but-profits-plunge-by-a-third/2162508.article/
[3] AInvest. "Shell $3.5 billion buyback: Profit decline, strategic move, or warning sign?" July 31, 2025. https://www.ainvest.com/news/shell-3-5-billion-buyback-profit-decline-strategic-move-warning-sign-2507/