Shell Provides Q1 2025 Trading Update
Why we think this is neutral
The Q1 2025 trading update from Shell presents a mixed outlook, with some business segments expected to perform in line or slightly ahead, while others face near-term challenges. The profit and revenue growth outlook is not strongly positive, and the cash flow and debt movements are also mixed. While the company's valuation appears reasonable, the tone of the update suggests caution around near-term market conditions.
Key Points
- Mixed outlook across business segments, with some facing near-term headwinds
- Cash flow and debt movements also present a mixed picture
- Valuation appears reasonable but not exceptionally low
- Tone of update indicates caution around near-term challenges
Summary
Shell plc has provided a trading update for the first quarter of 2025, giving an overview of the company's current expectations. The outlook presents a mixed picture, with some business segments, such as Integrated Gas and Chemicals and Products, expected to perform in line or slightly ahead, while others, like Renewables and Energy Solutions, face near-term challenges. The company's cash flow and debt movements are also mixed, with higher working capital outflows and derivative movements offsetting some positives. Shell's valuation appears reasonable, with a price-to-sales ratio of 0.6-0.8 and a price-to-earnings ratio of 15-20, though the tone of the update suggests caution around near-term market conditions.