$46.4 billion – shareholders happy with huge oil company profits

The billions in revenue from the oil companies bubble up the profits of their shareholders. Oil producers around the world paid out $46.4 billion (43.76 billion Swiss francs) in dividends in the third quarter, the British news agency PA quoted a study by London-based investment firm Janus Henderson on Wednesday. This is an increase of more than three-quarters compared to the same period last year.

The increase was expected given the results of energy giants such as BP, Shell and Saudi Aramco. Year-to-date, oil prices had soared due to Russia’s attack on Ukraine and huge demand from the post-pandemic recovery. Nevertheless, the analysis is likely to stimulate debate over an excess income tax.

Does a capital gains tax help?

“First of all, an excess profit tax should be sought in the EU – Germany should not be allowed to deviate there,” says Markus Dufner, director of the umbrella organization of critical shareholders, the German news agency. However, the income from this should not be “distributed according to the watering can principle”, but should primarily benefit the needy. In times of rising costs of living, there is a growing outcry in society and politics that companies are profiting indirectly from the Russian war. Dufner warned to “judgment” with the dividends.

Recently, US President Joe Biden had threatened companies with an excess profit tax. In Britain, the opposition is strongly demanding that Chancellor of the Exchequer Jeremy Hunt tighten the already existing tax on excess profits when he presents his budget this Thursday. However, Hunt is more likely to raise taxes and cut government spending. To attract investment to the City of London, the cap on bonuses from top bankers will also be lifted. That Prime Minister Rishi Sunak at the same time called on the company’s bosses to withhold salaries seemed to critics a mockery.

Example BP: The British posted their second-highest quarterly profit ever in the past quarter. Adjusted net income rose to $8.15 billion. Take Aramco, for example: the Saudi Arabian state-owned company earned a total of $ 41.6 billion, about 40 percent more than the year before. In the quarter before, that was even $ 48 billion. The list goes on and on: US giant Exxonmobil presented the largest quarterly profit in its company history. Competitors Chevron, Total, Repsol and Shell again clearly outperformed their billion-dollar profits in the same quarter of the previous year.

Employees see nothing of the money

Investors are now benefiting from this, with Brazil’s state-owned Petrobras as the biggest jump. Employees, on the other hand, often feel left out. Repsol offshore workers in Scotland went on strike for higher wages on Wednesday. They advocate an increase in line with inflation, which recently rose to 11.1 percent in the UK.

According to the study, most of the distributions by the oil companies were so-called special dividends, which are one-off payments. But it’s not just the oil industry that has been able to treat its shareholders to whopping fall payouts. According to Janus Henderson’s research, dividends worldwide have soared, rising 10.3 percent to $416 billion. That’s a record for a third quarter — although mining company payouts have fallen due to falling commodity prices.

Dividends are rising

90 percent of companies would have raised or kept their dividends the same. It fared best in the US, Hong Kong, Canada and Taiwan. In contrast, Chinese dividend growth lagged behind. The reason was the weakening real estate sector. For the full year, Janus Henderson now expects a global payout of $1.6 trillion.

However, Janus Henderson expert Jane Shoemake sees an end to the dividend boom. “Like other commodities, energy prices are cyclical and oil prices are already lower than they were at the beginning of the year, so the current exceptional levels of payouts are unlikely to continue,” Shoemake said. Slower economic growth is likely to impact revenues in 2023 and therefore the ability of some companies to increase payouts. (aeg/sda/awp/dpa)