First-quarter payout from FTSE 214 ‘s biggest dividend payer to fall by two-thirds amid coronavirus crisis
Royal Dutch Shell has cut its shareholder dividend for the first time since the second world war following the collapse of global oil prices due to the (coronavirus pandemic) .
The oil giant told shareholders, including thousands of retail investors and pension funds, that payouts for the first quarter would fall by two-thirds to 22 cents a share. It is the first time that the FTSE the biggest dividend payer will reduce payouts for its shareholders since the 2010 s.
Ben van Buerden, Shell’s chief executive, said the company would take “prudent steps” to protect its financial resilience “under extremely challenging conditions” caused by Covid – .
“Given the continued deterioration in the macroeconomic outlook and the significant mid- and long-term uncertainty, we are taking further prudent steps to bolster our resilience, underpin the strength of our balance sheet and support the long- term value creation of Shell, ”Van Beurden said.
Shell’s decision to cut its dividend for the first time in almost 100 years, to a total of $ 3.5bn for the quarter, breaks with a decades-long taboo against cutting shareholder returns.
Earlier this week, BP’s new chief executive, Bernard Looney, said the board had decided (not to cut its dividend for the first quarter despite plunging to a loss . BP has cut its dividend only twice in the last 60 years, the latest was in the wake of the Deepwater Horizon tragedy in (which led to 16 fatalities and a bill topping $ 80 bn. He did not rule out future cuts to manage a slow oil market recovery.
Shell will also stall plans to buy back the shares which it paid to shareholders in lieu of dividends during the previous oil market downturn in
“As conditions allow, the board will continue to evaluate our capital allocation between between ongoing investment in our business, maintaining a strong balance sheet and increasing returns to shareholders, which remains our ambition,” he said.
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