Shell Makes Long-Term Move in a Time of Uncertainty
Shell has a long-term mindset, but its shareholders will need the same. On Thursday, the company cut its dividend by two-thirds—a shocking move for a dividend stalwart that hadn’t cut its payout since World War II. However, Chief Executive Ben van Beurden said it was “unrealistic and maybe even irresponsible” not to act.
Energy demand has fallen by an “unprecedented” 6%, according to the International Energy Agency—the equivalent of what India, the world’s third-largest consumer, uses in one year. Falling demand is paired with excess supply: A price war between Saudi Arabia and Russia kicked off a plunge in oil prices that these two big producers now seem powerless to control.
Dividends have become an increasingly important prop to the case for investing in big oil companies as the market has turned away from fossil-fuel producers in recent years. Some avoid the shares because of their contribution to global warming. For others, the prospect of widespread decarbonization raises the risk of stranded assets and peak oil demand—big changes for a sector that only a few years ago was worried about running out of oil.
Werner Enterprises Reports $592.7 Million Revenue for Q1
Werner Enterprises reported steady revenue but a decline in net income during the first quarter of 2020, and the company said it is positioning itself to navigate the freight environment going forward amid the COVID-19 pandemic.
Werner’s Q1 truckload transportation services segment saw revenues increase less than 1%, to $464.9 million from $462.9 million, while operating income decreased by 32% to $29.1 million from $43 million.
Top Energy Stories
Royal Dutch Shell cut its dividend for the first time since World War II, as a steep drop in oil demand upends what has long been a fundamental bargain between oil majors and their investors.
Venezuela’s government is proposing a sweeping overhaul of its energy industry, scaling back the role of the state and handing over greater control to private companies to boost plummeting oil output, according to a government presentation.
Saudi Arabia’s finance minister has warned the kingdom needs to make “extreme” spending cuts to manage the economy during the COVID-19 crisis and oil price crash.
Top Freight Transportation Stories
The Federal Emergency Management Agency (FEMA) issued an April 10 report saying targeted relief was needed for the industry to protect the supply chain from failures. And now a major ELD and fleet management company has garnered 20,000 signatures on a petition asking for more aid for smaller carriers.
The Mississippi Department of Transportation recently began a construction project to extend state Route 76 as part of a regional highway development effort.
Truckload carrier Werner reported limited COVID-19 impact in Q1, as March panic buying lifted demand for about three weeks. Revenues in March were comparable to March 2019, CEO Derek Leathers said. Q1 revenues were down 1% year over year (YoY) at $592.7 million, according to a Wednesday earnings release. Net income fell 36% YoY to $23 million.
Top Economic Stories
The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the novel coronavirus almost shut down the country, ending the longest expansion in the nation’s history.
The US economy suffered its most severe contraction in more than a decade in the first quarter of the year, as the country introduced lockdowns to slow the spread of coronavirus.
The Institute for Supply Management, an association of purchasing managers, reported May 1 that its manufacturing index dropped to 41.5 last month from 49.1 in March. Anything below 50 signals contraction.