Shell Stock: Cost Cuts Deepen As Shareholder Returns Rise

Shell is intensifying its cost-cutting measures while simultaneously boosting returns to shareholders, the energy giant announced during its Capital Markets Day. The company plans to reduce structural expenses by $5-7 billion by the end of 2028, significantly expanding its previous target of $2-3 billion in savings by 2025. Under CEO leadership, Shell aims to become "simpler, more resilient, and more competitive" through these strategic adjustments. In a move likely to please investors, the company will increase shareholder distributions to 40-50% of operating cash flow, up from the previous 30-40% target. The focus remains on share buybacks while maintaining the annual dividend growth of 4%. Shell also expects to grow its free cash flow per share by over 10% annually until 2030, potentially enhancing the stock's appeal to long-term investors.

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Despite the enhanced cost-cutting program, Shell outlines clear growth ambitions. The energy giant intends to strengthen its leading position in liquefied natural gas (LNG), with plans to increase sales in this segment by 4-5% annually until 2030. Overall production in the combined upstream and integrated gas business is targeted to grow by 1% annually through 2030, maintaining liquid production at 1.4 million barrels per day with progressively lower carbon intensity. For its chemicals business, Shell is exploring strategic options and potential partnerships in the US, while selective site closures are being considered in Europe. The company affirmed its commitment to previously established climate goals outlined in its energy transition strategy.