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Shell raised its dividend and announced another round of share buybacks as it reported annual profits for 2023 of more than $28bn.

Europe’s largest oil and gas company said on Thursday that adjusted earnings were $28.3bn, down about a third from the record set in 2022 but higher than any other year since 2011.

“Shell delivered another quarter of strong performance,” said chief executive Wael Sawan, adding that the company had made “good progress” against the targets he outlined in the middle of last year.

Adjusted earnings of $7.3bn in the final three months of 2023 beat average analyst estimates of $6.04bn, thanks in part to a strong performance from the liquefied natural gas business.

Since taking over as chief executive in January last year, Sawan has sought to improve financial performance by simplifying Shell’s approach to the energy transition. That process has involved streamlining the senior management team, re-emphasising the oil and gas business and trimming less profitable parts of the company’s low-carbon portfolio.

Shell has also promised to trim costs, pledging to reduce capital spending in the next two years to $22bn-$25bn a year, down from a planned $23bn-$27bn in 2023, and cut group-wide operating costs by $2bn-$3bn by the end of 2025. Capital expenditure last year was $24.4bn it said on Thursday.

Shell, like most of its rivals, has used bumper profits from the past two years to embark on a huge share repurchasing scheme.

On Thursday, it announced a further $3.5bn of share buybacks and increased its dividend by 4 per cent to $0.34 a share. It still remains below the $0.47 per share paid each quarter from 2014 to 2019.

The biggest contributor to group profits was once again the integrated gas division, which reported quarterly earnings of $4bn. Shell’s oil division also performed well, generating profits of $3bn underpinned by higher production than the previous quarter, but its refining operations suffered.

In a worrying sign for the global economy, Shell’s chemicals and products division, which produces refined fuels, reported adjusted earnings of just $83mn because of lower refining margins, lower demand and planned maintenance.

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