Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (March 2018)
60 slides from Shell's investor day presentation, Mar 21, 2018
Slide 1: Downstream Open House: Delivering a world-class investment case
Downstream Open House Delivering a world-class investment case Royal Dutch Shell plc March 21, 2018 #makethefuture Royal Dutch Shell March 21, 2018
Slide 2: John Abbott, Downstream Director
John Abbott Downstream Director Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 3: Definitions & cautionary note
Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves. Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC Definitions & proved oil and gas reserves. Resources are consistent with t
Slide 4: Summary
Summary Key messages Significant and increasing cash and returns to support world-class investment case Thrive in Increasing portfolio resilience, leveraging technology, digitalisation and the energy new business models transition Transformational and profitable growth World-class Organic fr
Slide 5: Strategic themes delivery: on track
2017 ~$54 2019-21** ~$60 Strategic themes Strategic Capital employed Free ROACE Capital employed Free ROACE ($ bln cash flow cash flow* delivery: themes end 2017) ($ bln p.a) (%) ($ bln) ($ bln p.a) (%) on track Cash engines ~59% ~14 ~9 ~70% 25-30 >10 Growth ~27% ~2 ~4 ~20% 1-2 ~5 priorities Emergin
Slide 6: Downstream: Leadership Team
Downstream: Leadership Team John Abbott Huibert Vigeveno István Kapitány Lori Ryerkerk Andrew Smith Graham van’t Hoff Downstream Director EVP Global Commercial EVP Retail EVP Manufacturing EVP Trading & Supply EVP Chemicals Bjorn Fermin Gerard Penning John Hollowell* Martin Bambridge* Fabian Ziegler
Slide 7: Downstream: An integrated story
Downstream: An integrated story Chemicals Refining Supply & Global Commercial Trading Customers Retail Upstream & Integrated Gas Royal Dutch Shell March 21, 2018 7
Slide 8: Downstream: Business environment
Downstream: Oil and liquid demand outlook Chemicals demand outlook Business Million barrels per day 120 Petrochemicals* demand in kT per annum 500.000 environment 110 400.000 100 300.000 Asia 52% 90 200.000 Asia 37% 80 100.000 70 0 2010 2015 2020 2025 2030 2035 2040 2000 2005 2010 2015 2020 2025 203
Slide 9: Oil Products: Business environment
Oil Products: Global vehicle sales Global vehicle fleet Business Million vehicles/year Million vehicles 140 environment 2.000 120 1.500 100 80 1.000 60 40 500 20 0 0 2015 2020 2025 2030 2035 2040 2015 2020 2025 2030 2035 2040 Internal combustion engine (ICE) Plug-in hybrid EV (PHEV) Battery EV (BEV)
Slide 10: Downstream
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Further strengthen our financial performance Capital employed: $17 billion Capital employed: $24 billion Capital employed: $15 billion Sales volumes: 6.6 mboe/d Refinery processing: 2.6 mboe/d Sales volumes: ~18 mtpa U
Slide 11: Downstream strategy: A reminder
Downstream Cash engine Growth priority strategy: Marketing Refining & Trading Chemicals A reminder Global #1 Brand Large, complex integrated sites Advantaged and flexible Differentiated Fuels & Lubricants in Trading hubs feedstocks Growth Competitiveness Strong product portfolio Non-
Slide 12: Safe and reliable operations
Safe + reliable Process safety/environment – Downstream Personal safety – Downstream operations # Tier 1 & 2 Process Safety Incidents 200 TRCF/million working hours Operational 150 2 excellence 100 1 50 0 0 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Tie
Slide 13: Downstream Financial performance
Downstream Cash flow Capital employed Financial $ billion 15 $ billion 15 $56 billion at end 2017 performance 10 10 5 5 0 0 2013 2014 2015 2016 2017 -5 -5 -10 -10 CFFO excluding working capital Working capital movement Free cash flow (RHS) Refining & Trading Marketing Chemicals Earnings Earnings by
Slide 14: Competitive performance
Competitive Oil Products – ROACE Downstream – Cash flow from operations performance % $ billion 15 World-class 20% 10 investment 10% case 5 0% 0 2010 2011 2012 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Shell Peer group Shell Peer group range Chemicals – ROACE Global brand preference % % 30%
Slide 15: Exposure and resilience
“Exposure Geographical exposure Chemicals – feedstock exposure and resilience” Earnings per region % of feedstock Resilient today…and tomorrow 2017 2025 2017 2021 2025 East Europe & Africa Americas Oil Gas Marketing – earnings growth to 2025 Refining & Trading – Breakeven margin $ billion $ per barr
Slide 16: Offering more and cleaner energy
Offering more and cleaner Transport Electronics Biofuels energy Lighter vehicles, Digitalisaton Conventional and advanced Mobility efficiency CNG/LNG solutions Construction Energy & water Light & Heavy Duty Vehicles Fuel additives, Insulation and Low temperature detergents and Marine energy efficien
Slide 17: Innovation & Customer
Innovation & Customer Technology Digitising the core New business models Shell is developing and adapting the Chemicals technology R&D Data analytics LubeChat technology of the Improvement to refining Technology use in monitoring Pilots: Fitcar, TapUp, AccuPort future, building on our cu
Slide 18: Summary
Summary Key messages Significant and increasing cash and returns to support world-class investment case Thrive in Increasing portfolio resilience, leveraging technology, digitalisation and the energy new business models transition Transformational and profitable growth World-class Organic fr
Slide 19: Marketing: István Kapitány, EVP Retail
Marketing István Kapitány EVP Retail Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 20: Shell has the most profitable Marketing business in the industry
Shell has the Earnings: Marketing most profitable $ billion Earnings split (2017) ROACE 26% Marketing businesses in 4 the industry EU + Africa Americas Chemicals 2 Balanced portfolio2 East 0 Refining & 2013 2014 2015 2016 2017 Trading Shell Peer group Others Customers first Marketing Global +$1.4
Slide 21: Shell retail is the #1 mobility retailer
Shell retail is # of sites worldwide of selected retailers1 the #1 mobility retailer GAP ZARA Carrefour Total Aslam Khoso – Global Service Champion Winner 2016 30M+ Shell Starbucks BP Customers per day Shell Reference industry IOCs 70 Markets + 44K+ Locations 1 – Source: Latest published company ann
Slide 22: Shell retail has grown strongly since 2013
Shell retail has Earnings: retail Gross margin contribution grown strongly $ billion ROACE 24% since 2013 2 >7% Main-grade fuel CAGR 1 50% Convenience retail V-Power™ Fleet solutions Loyalty 0 2013 2017 Differentiated Programmes Yield on cost Income per site Active Portfolio Management Index (20
Slide 23: Shell retail success is built upon brand and differentiation
Shell retail Brand value1 Preferred IOC across 62 countries2 success is built $ billion upon brand and 39 51 differentiation Total 30 BP Coca-Cola 28 Nike Esso Chevron 21 Total 20 BP Mobil 1 - Source: Brand Finance Global 500 (2018) 2 - Source: IPSOS, Global Customer Tracker – Shell analysis based o
Slide 24: V-Power is the best selling premium fuel in the world
V-Power™ is the best selling premium fuel in the world V-Power™ penetration: branded sales Iconic partners % 20% 10% 0% 2013 2015 2017 2020E US ‘street price’ for premium fuels2 Market share: premium fuels in the UK3 $ per gallon Shell Esso BP Sainsburys Tesco Morrisons Others Shell Major Minor Regi
Slide 25: Shell is the largest global provider of solutions for business fleets
Shell is the >7 Million #1 largest global provider of Shell cards are accepted in >200,000 roadside solutions for locations worldwide Active Shell cards business fleets Network 2 Million Customers served every day Fleet of trucks Fleet of cars/vans $2+ billion road services turnover Digital offers &
Slide 26: Securing our position as the leading global mobility retailer
Securing our position as the leading global mobility retailer Our 5 Ambitions by 2025 1 2 3 4 5 50% 20% >50% Every customer 100% Share of Of our fuels Reduction in carbon Treated like a Of Shell service margin from margin from low intensity of Shell guest at Shell service stations committed to non-f
Slide 27: Significantly growing our convenience retail business
Significantly growing our convenience retail business Growth in # of stores Shell convenience store - Singapore Broaden our range of coffee and food offers >5,000 Basket check out in 5 seconds (pilot with Developing unmanned cashier with IBM) – United Kingdom Bingo Box Technology - China 2017 - 2020
Slide 28: Leading through the energy transition with tangible actions
Leading through the energy transition with tangible actions Hydrogen network development – USA & Germany 20+ ‘recharge’ locations – UK & The Netherlands 500 ultra-fast charge posts with IONITY in next 2 years – Europe Integrated charging solutions Royal Dutch Shell March 21, 2018 28
Slide 29: Innovating with award winning digital solutions for our customers
Innovating with award winning digital solutions for our customers Shell Motorist App active in In-car payments with Jaguar Land Mobile payment in UK, Turkey, Fuel delivery to your door in NL 36 markets and voted the Best Rover and General Motors Germany, China and US with a ‘Tap’ on your phone Mobil
Slide 30: Outlook to 2025 aiming for significant growth in retail
Outlook to Earnings: retail 2025 aiming $ billion ROACE 24% >20% >20% for significant New revenues 4 growth in retail Grow convenience retail 5,000 new stores New offers Resilient sectors 2 Grow fleet solutions New customers 5,000 new sites: China, India, Indonesia, Mexico and Russia 0 2013 2017 Gro
Slide 31: Marketing: Huibert Vigeveno, EVP Global Commercial
Marketing Huibert Vigeveno EVP Global Commercial Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 32: Global commercial: the B2B arm of Marketing
Global Lubricants - global lubricants market share1 Aviation - sales by region (in 2017) commercial: % Europe & Africa the B2B arm of 10% East Shell Americas 5% 0% ExxonSupplier BP TOTAL Mobil Specialties - sales by region (in 2017) Europe & Africa 1M+ 150 East Americas B2B customers Markets Attra
Slide 33: Global commercial delivered exceptional returns
Global Earnings: global commercial commercial $ billion 2 ROACE Premium & organic growth delivered 26% exceptional > 6% Supply chain footprint returns 1 CAGR Simplification & Offshoring 0 2013 2017 Yield on cost1 Earnings per FTE Index (2013=100) Index (2013=100) 212 200 200 Selected retailers
Slide 34: Shell lubricants success is built on technology, brand and people
Shell lubricants Brand share of preference1 - markets worldwide* Volume share2 – comparison with BP and Total success is built on technology, Consumer brand and Exxon Mobil people BP Commercial 20% 16% 14% Resilient Industrial Sectors Passenger Car Motor Oils Shell Peer Group Exxon Mobil 1 in 9 engi
Slide 35: Shell lubricants is the IOC market leader in China
Shell lubricants PCMO market: brand preference in China1 Supply chain footprint in China Tianjin is the IOC 40 NGG market leader Zhapu in China MOBIL North 20 TsingYi CASTROL East West Preference SINOPEC Operation Unit CN, HK South Zhuhai Lube Oil Plant 5 Grease Plant 1 TOTAL Distributor Center 5 0
Slide 36: Our unique global customer footprint can grow further
Our unique DEEP TECHNICAL EXPERTS, global customers footprint can grow further Passenger Car Motor Oil1 Premium volume development % 10 7 out of 10 largest car manufacturers choose 5 Base oil manufacturing plants Shell lubricants Lubricants & grease blending plants Customer operations 0 R&D Centre M
Slide 37: Strengthening our position as a world class B2B business
2017 2025 Strengthening our position as +24% a world class Industrial LubeChat B2B business Production1 +25% Fitcar ICE Vehicles2 +36% Skypad Aircrafts3 +27% AccuPort Ship capacity4 1 – Source: Oxford Economics (2018); 2 Source: Shell analysis based on aggressive EV scenario; 3 – Source: Shell analy
Slide 38: Outlook to 2020 is very strong with exceptional returns
Outlook to Earnings: global commercial 2020 is very $ billion 3 ROACE 26% >25% >25% strong with New revenues exceptional Accelerate digital and services growth returns 2 Resilient sectors $1 billion investment in technology 1 New customers Grow market share in China, India, Indonesia, Mexico and Rus
Slide 39: Retail and global commercial are exceptional performers
Retail and Earnings: retail + global commercial Strongest business global performance in peer $ billion ROACE 25% >20% >20% commercial are group exceptional Attractive industries, >7% 6 superior returns performers Resilient in the 2020s CAGR 4 2 0 2013 2017 Growth 2020 Growth 2025 Global Comme
Slide 40: Refining & Trading: Lori Ryerkerk & Andrew Smith
Refining & Trading Lori Ryerkerk & Andrew Smith EVP Manufacturing & EVP Trading & Supply Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 41: Refining & Trading: Fully integrated and highly dynamic global system
Refining & Trading: Fully integrated and highly dynamic global system Royal Dutch Shell March 21, 2018 41
Slide 42: Chemicals, Refining & Trading Portfolio
Fredericia Scotford FEP/Stanlow (JV) MOSCOW CALGARY LONDON ROTTERDAM Chemicals, Puget Sound Sarnia Pernis Moerdijk Rheinland Schwedt (JV) Refining & Trading Miro (JV) BEIJING Martinez Pennsylvania HOUSTON Deer Park (JV) Mobile Portfolio Karachi Geismar Norco Al Jubail (JV) Convent DUBAI Nanhai (JV)
Slide 43: Chemicals, Refining & Trading Integration
Chemicals, Refining & Trading Oil Products Integration “Make-Buy-Blend” Product blending Best selection of & supply purchased and Marketing produced components Highest value Refining Crude and Trading feedstock, equity & supply and non-equity Integration and Crude & flexibility release feedstock Hig
Slide 44: Chemicals, Refining & Trading US Gulf Coast & Northeast
Chemicals, Refining & Trading Shell terminals US Gulf Coast Shell refineries Northeast & Northeast volume growth +30 thousand barrels per day Hurricane Harvey response business Significant and continuity for sustainable value customers uplift created Norco by integrated Convent re-optimisation of th
Slide 45: Norco manufacturing complex: Refining & Chemicals integration
Past Present Future Norco manufacturing Motiva streams managed Integration in Shell’s portfolio Short term complex at arm’s length Catalyst reformulation to Refining & Under-optimised assets Integrated economics drive real time optimisation of streams maximise utilization of integrated val
Slide 46: Delivering operational excellence
Process safety & environment – Downstream Personal safety – Downstream Delivering # Tier 1 & 2 process safety incidents TRCF/million working hours operational 180 160 2 excellence 140 120 100 80 1 60 40 20 0 0 2011 2012 2013 2014 2015 2016 2017 Tier 1 Tier 2 TRCF/million working hours TRCF trendline
Slide 47: Margin resilience and stability
Margin Refining & Trading – Breakeven margin resilience and $ per barrel 10 Delivering more resilient and stability 9 less volatile margin from a high graded and integrated 8 portfolio 7 6 2011-2013 2014-2017 2020E Integrated indicative margin $ per barrel 14 Forward view based on 12 average of
Slide 48: Building resilience for the future
Building Investing in refinery resilience Strengthening the core resilience for Bottom of barrel upgrading the future Growth Crude flexibility Capital investment: Logistics and integration $ 2-3 billion per year Non- and little (2018-2020 average) Low sulphur fuel oil (IMO) preparedness disc
Slide 49: Chemicals: Graham van't Hoff, EVP Chemicals
Chemicals Graham van’t Hoff EVP Chemicals Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 50: Chemicals: Positioning in the competitive landscape
Positioning in the competitive landscape Growth priority Base Chemicals/ Performance Solutions Chemicals Intermediates CONSUMERS FEEDSTOCKS Pure Chemical Add Differentiation Companies Top 10 producer of Ethylene Top 5 producer Access to advantaged feedstock Customised solutions of Propylene
Slide 51: Chemicals Strategy
Chemicals Strategy Advantaged Strong product & Excellence every day First class footprint feedstock customer portfolio & HSSE Access advantaged feedstock Monetize with competitive advantage A highly profitable hydrocarbon upgrader Technology Royal Dutch Shell March 21, 2018 51
Slide 52: Chemicals Technology leader
Chemicals Technology leader OMEGA (MEG - Polyesters) Technology focus SMPO (Styrene Monomer – Insulation / Polyols - Foams) and operating SHOP (Detergents) expertise create DPC/PC (Diphenyl carbonate – Phone casings) winning position Technology licensing and catalyst sales combine to creat
Slide 53: Chemicals Financial and competitive performance
Chemicals Earnings – Chemicals Competitive performance – ROACE 4Q rolling Financial and $ billion $/barrel % 3 120 30 competitive Average: $107 performance 25 2 80 20 15 Average: $50 1 40 10 5 Ensure robust 0 0 0 performance under 2010 2011 2012 2013 2014 2015 2016 2017 Q4 Q4 Q4 Q4 Q4 Q4 different m
Slide 54: Chemicals Competitiveness
Chemicals $500 million per annum Competitiveness Unit margin Volume growth Organisational, operational and Costs cultural improvements deliver sustainable annual earnings increases Operational excellence Royal Dutch Shell March 21, 2018 54
Slide 55: Chemicals Growth projects
Under construction Chemicals 425,000 metric tonnes Remains on track to begin Growth additional Alpha Olefins commercial production in 2H capacity 2018 projects Geismar site will become Geismar, USA largest AO facility in the world New liquids cracker and Start-up of cracker and new derivat
Slide 56: Chemicals Organic growth
Chemicals Improve base business Organic growth Expand current base portfolio Adding to portfolio – growth Earnings + ROACE $ billion % 4 20 Targets aspiration 15 per year mid-’20s: Earnings: 2 10 ~$3.5 – 4 billion Cash flow: 5 ~$5 – 6 billion Base capex: 0 0 2009 2010 2011 2012 2013 2014
Slide 57: John Abbott, Downstream Director
John Abbott Downstream Director Royal Dutch Shell Royal Dutch Shell March 21, 2018
Slide 58: Downstream: Delivering a world-class investment case
Downstream Delivering a Downstream: world-class Thrive in the energy Customer-centric investment transition case Uniquely integrated World-class Competitive inv estment case Resilient Strong Leading through the energy transition license to operate Delivering profitable growth Royal Dutch
Slide 59: Questions & Answers
Questions & Answers John Abbott Huibert Vigeveno Istvan Kapitany Lori Ryerkerk Downstream Director EVP Global Commercial EVP Retail EVP Manufacturing Andrew Smith Graham van’t Hoff Bjorn Fermin Gerard Penning EVP Trading & Supply EVP Chemicals EVP Downstream EVP Downstream Finance Human Resources Ro
Slide 60: Royal Dutch Shell March 21, 2018
Royal Dutch Shell March 21, 2018