Earnings

Earnings 2022-2021

Segment earnings in 2022 were $4,515 million, 1018% higher than in 2021, reflected higher Products margins (increase of $5,721 million) reflecting higher Refining margins and higher contributions from trading and optimisation, lower tax charges (decrease of $300 million), as well as lower depreciation charges (decrease of $175 million). These were partly offset by lower Chemicals margins (decrease of $2,705 million) and higher operating expenses (increase of $822 million).

Segment earnings in 2022 included a net charge of $204 million.

This included:

• impairment charges of $226 million mainly related to impairment of capital expenditure additions across sites based on the revisions to medium- and long-term price outlook assumptions decision considered in 2020;
• legal provisions of $149 million;
• losses of $147 million related to the fair value accounting of commodity derivatives;
• tax charges relating to the EU solidarity contribution of $74 million;
• gains of $223 million related to the sale of assets; and
• gains of $104 million related to the remeasurement of redundancy and restructuring costs (mainly pension curtailments).

These gains and losses are part of identified items and compare with 2021 which included a net charge of $1,712 million as follows:

• impairment charges of $1,814 million mainly related to the divestment of Puget Sound, Mobile and Deer Park refineries in the USA and closure of production unit on Jurong Island, Singapore;
• provisions for onerous contracts of $82 million; and
• a net gain of $160 million related to the fair value accounting of commodity derivatives.

Adjusted Earnings in 2022 were $4,719 million, compared with $2,115 million in 2021. Chemicals accounted for (29)% of these 2022 earnings, Refining for 80% and Trading and Supply for 49%. The increase in Adjusted Earnings of $2,604 million, driven by the following:

• Products Adjusted Earnings were $5,728 million higher than in 2021, mainly driven by higher realised refining margins due to increased prices and higher contributions from trading and optimisation. These were partially offset by higher operating expenses.
• Chemicals Adjusted Earnings were $3,125 million lower than in 2021, mainly because of lower margins due to weak price environment, lower associate income and higher operating expenses.

Earnings 2021-2020

Segment earnings in 2021 were $404 million, 111% higher than in 2020.

Segment earnings in 2021 included a net charge of $1,712 million as described above. This net charge is part of identified items and compares with 2020 which included a net charge of $6,656 million as follows:

• Impairment charges of $5,500 million (across sites, reflecting revisions to medium- and long-term price outlook assumptions in light of changes in supply and demand fundamentals in the energy market; macroeconomic conditions; the COVID-19 pandemic; expenditure at Pulau Bukom in Singapore including transformation; and the shutdown of the Convent refinery in Louisiana, USA);
• restructuring costs of $313 million, mainly shutdown of Convent, Bukom transformation and various initiatives across Chemicals & Products;
• other net charges of $657 million (mainly onerous contract provisions due to shutdown of Convent and legal provision);
• net charge of $112 million related to the fair value accounting of commodity derivatives; and
• net loss from sale of assets of $74 million.

Adjusted Earnings were $2,115 million in 2021 compared to $2,835 million in 2020. The decrease in Adjusted Earnings of $720 million, was driven by the following:

• Products adjusted earnings were $1,511 million lower than in 2020, mainly driven by lower contributions from trading and optimisation, higher operating expenses and unfavourable tax movements. These were partially offset by higher margins in Refining, Oil sands (higher average realised price) and lower depreciation.
• Chemicals adjusted earnings were $792 million higher than in 2020, mainly because of higher margins due to stronger price environment, favourable deferred tax movements, partly offset by higher operating expenses.