The Dutch-British oil company Shell is facing more and more difficulties.
The latest adversary is the activist shareholder Daniel Loeb with his American company Third Point.
In the latest edition of his notorious quarterly letters to investors, he reports that he has built up a stake in the oil company in recent months - and is now calling for it to be split up: essentially into a company for fossil fuels and one for renewable energies.
Klaus Max Smolka
Editor in business.
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The news comes the same week that the EU's largest pension fund announced it would sell its Shell shares: ABP is selling all oil, gas and coal stocks, including a multi-hundred million euro package to Shell.
The most important Dutch pension fund with assets to the value of 528 billion euros organizes company pensions for employees in the public sector and in education and has a lighthouse function in the fifth largest economy in the EU - and internationally as one of the ten largest pension funds in the world.
Investor insists on change
Loeb's investment vehicle Third Point is one of those aggressive investors who insist on fundamental changes in corporations. Loeb often wants companies to sell divisions or to split up completely. In the Netherlands, for example, he asked the chemical company DSM to do the same. He let the attack roll off at first - but has now split up anyway. Activist shareholders seldom fail to have an effect, at least indirectly - by finding like-minded shareholders in the shareholders and acting as a catalyst with their small stake. In the meantime, boards of directors often enough repel business out of hasty obedience. Third Point had also joined Philips in the meantime. A corresponding media report was enough back then - 2017 - to drive the share price up.Philips CEO Frans van Houten stated a short time later in the FAZ conversation that he would not have any dialogue with Third Point, and at the time affirmed that he would keep the consumer equipment division with irons, vacuum cleaners and other things. It has now been sold, which has been planned for a long time and is likely to be due to the pressure of the capital market - even if not that of an individual investor.
Shell has been deeply on the defensive since 2020: During the corona lockdowns, the oil price and share price fell sharply. The company, with two headquarters in The Hague and London, cut jobs and lowered the dividend for the first time after the Second World War - on a paper that, like the major utility stocks in Germany, was a classic dividend paper, also for long-term private investors. In the meantime, Shell is increasing its profit sharing again, through share buybacks and a slightly increased dividend, which, however, is now well below the pre-crisis level.
In addition, there is social pressure.
Formerly part of national pride, Shell's reputation has been marred because of the carbon footprint of its core oil and gas business.
The environmental organization “Milieudefensie” achieved a sensational partial victory against the group in May: The district court in The Hague ordered Shell to reduce its net emissions by 45 percent by 2030, more than according to its own previous plans.
Shell appealed in July.
CEO Ben van Beurden announced on Thursday for the quarterly balance sheet that the targets would be tightened.
Now emissions are to be reduced by 50 percent by 2030 compared to 2016.
They should reach zero by 2050.
Shell wants to become “greener”
The business model as a whole is up for discussion. The proportion of energies commonly referred to as “green” is to increase. In September the company announced that it would build a biofuel plant at the Pernis industrial site in Rotterdam, one of the largest of its kind in Europe. In contrast, the corporation has sold larger fossil fuel businesses.
Third Point argues that Shell cannot pursue coherent strategies for both at the same time due to the diverging interests of the various socio-economic partners ("stakeholders"): for the traditional and the new businesses.
“Shell seems sentimentally attached to its 'super important' legacy,” writes Loeb.
Shell rejected the request.
Although it could be convincing from a financial point of view, it would not work in real life, said CFO Jessica Uhl when presenting the quarterly balance sheet.
Van Beurden argued that Shell’s strategy was coherent and well understood by the majority of shareholders.Keywords: