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Shell Cuts Dividend for First Time
Since 1940s as Oil Demand Collapses

Royal Dutch Shell cut its dividend for the first time in 80 years and suspended the next tranche of its share buybacks following the collapse in global oil demand due to the coronavirus pandemic.

"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," CEO Ben van Beurden said in a statement.

Starting in the first quarter, Shell will reduce its quarterly dividend to 16 cents per share from 47 cents in the previous quarter.

Van Beurden said he expected the impact of the drop in oil demand to be more severe in the second quarter, while CFO Jessica Uhl said the company was bracing for a deeper and longer recession that would expand into 2023.

For decades, Shell has taken pride in having never cut its dividend since the Second World War, resisting such a move even during the deep downturns of the 1980s.

Shell's first-quarter net income attributable to shareholders based on a current cost of supplies (CCS) and excluding identified items, fell 46% from a year earlier to $2.9 billion, above the consensus in an analyst survey provided by the company.

Shell's fourth-quarter net income was also $2.9 billion. The company said it cut activity at its refining business by up to 40% in response to the demand shock.

Of the 29 analysts following Royal Dutch Shell, 12 analysts rate Shell a “BUY,” 1 “Overweight,” and 16 analysts a “Hold.” The average target price is $41.86.

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