Shell Unveils New Strategy: Higher Buybacks, Cost Cuts And 10% Annual Free Cash Flow Growth

On Tuesday, at Capital Markets Day 2025, Shell PLC SHEL disclosed several strategic updates and investments.

The company plans to increase shareholder distributions from 30%-40% to 40%-50% of cash flow from operations (CFFO) throughout economic cycles.

In particular, the company expects to focus on share buybacks while maintaining a 4% annual progressive dividend policy.

Shell plans to prioritize high-margin growth in its Mobility and Lubricants businesses.

The company also seeks to capitalize on its competitive advantages by developing profitable and scalable ventures in low-carbon energy, with up to 10% of capital allocated to these initiatives by 2030.

Moreover, Shell plans to enhance its Chemicals division by pursuing U.S. partnerships, optimizing European operations, and reducing capital commitments while boosting returns by 2030.

Shell has raised its structural cost reduction target from $2-3 billion by the end of 2025 to a cumulative $5-7 billion by 2028, based on 2022 levels.

Shell plans to invest for growth while reducing annual capital expenditures to $20 billion-$22 billion for the period of 2025-2028.

The company also aims to increase free cash flow per share by over 10% annually through 2030.

Shell plans to strengthen its leadership in liquefied natural gas (LNG) by increasing sales by 4%-5% annually through 2030.

Also, the company intends to expand overall production across its Upstream and Integrated Gas sectors by 1% per year while maintaining daily liquid production at 1.4 million barrels, with a focus on lowering carbon intensity.

Last week, Shell’s subsidiary, Shell Brasil Petróleo Ltda., made the Final Investment Decision (FID) for the Gato do Mato project.

The project is a deep-water initiative located in the pre-salt region of the Santos Basin offshore Brazil.

Investors can gain exposure to the stock via Precidian ETFs Trust Shell plc ADRhedged SHEH and Abacus FCF Real Assets Leaders ETF ABLD.

Price Action: SHEL shares are up 1.68% at $72.48 premarket at the last check Tuesday.

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