Shell provides profitable growth outlook as Downstream business transforms Recently Royal Dutch Shell plc (Shell) updated investors on its Downstream growth ambitions, underlining the important role they will play in delivering Shell’s world-class investment case. 2018 Hyundai Elantra Eco at Shell John Abbott, Downstream Director: Shell reiterated its expectation of $6-7 billion annual organic free cash flow from Downstream by 2020, at $60 per barrel (real terms 2016) and mid-cycle Downstream conditions, with $9-12 billion expected by 2025. The company plans to invest $7-9 billion a year across Downstream, and to deliver a return on average capital employed (ROACE) above 15%. Delivery through a uniquely integrated approach A customer-centric mindset and business integration are fundamental to our approach. Shell’s Downstream leadership position is based on the unrivalled strength of customer relationships across Retail, Global Commercial and Chemicals, built over decades. The integrated management of our businesses and the unique reach of our trading operation allows us to capture and maximise value across the value chain as market conditions change, enhancing the resilience of our business. Across its Marketing businesses, Shell is leveraging its iconic global brand and technically differentiated fuels and lubricants, while growing in new markets and sectors that will be resilient through the energy transition. Chemicals, a growth priority for Shell, has been through a transformational and profitable journey and proved robust across a range of crude oil and natural gas prices. Meanwhile, the reshaping of how Refining and Trading work, to focus on complex, highly integrated and competitive sites in the three main trading hubs – the US Gulf Coast, Singapore and Rotterdam – is nearing completion. The success of these businesses is enhanced by teams working constantly to capture maximum value in all our markets. We can make, buy or blend products – providing the right product, at the right cost, to the right market. Lines of business updates Marketing: the largest and most profitable marketing business among international oil companies The Marketing businesses (Retail and Global Commercial) represented around 50% of Downstream’s earnings in the last five years, generating $1.4 billion in additional earnings in 2017, compared with 2013. It is the largest, most profitable marketing business among international oil companies. The combined growth strategies across Retail and Global Commercial are expected to generate more than $1 billion in additional annual earnings by 2020, and more than $2.5 billion by 2025, an average annual growth rate greater than 7%, while maintaining a ROACE of more than 20%. Retail: Shell is the number one mobility retailer 2025 growth ambition of 40 million daily customers across 55,000 sites, from 30 million across 44,000 sites today. Annual earnings expected to grow by more than $1.5 billion by 2025 – from $2.2 billion in 2017 to close to $4.0 billion in 2025. Expected ROACE in excess of 20% a year. Growth driven by: more than 10,000 new sites, with 5,000 located in the fast-growing markets of China, India, Indonesia, Mexico and Russia; further penetration of premium fuels and differentiated marketing programmes, including expansion of markets and services for the fleet solutions business (B2Bsegment); 5,000 new convenience stores and selective upgrades to existing convenience stores worldwide; and new digital and e-mobility services. Global Commercial: Shell is the global number one player in lubricants Annual earnings expected to grow by more than $1.0 billion by 2025 – from $1.4 billion in 2017 to close to $2.5 billion in 2025, $400 million of which is expected by 2020. Expected ROACE of more than 25% a year. Growth driven by: growth in the premium lubricants sector, aiming for 70% penetration of the passenger car motor oil segment by 2025 (from around 40% in 2017); expansion of market share in the priority growth markets of China, India, Indonesia, Mexico and Russia; growth in resilient sectors, such as bitumen, aviation and industrial lubricants; and new digital businesses and services. Refining and Trading: resilient and uniquely integrated businesses Portfolio management, operational excellence and further integration of the Refining and Trading businesses have allowed us to capture more value and improve our resilience: We have reduced our Refining and Trading indicative integrated break-even margin by more than $1.5/barrel in the 2014-2017 period, compared with 2011-13. By 2020, we expect to reduce our Refining and Trading indicative integrated break-even margin by another $0.5-0.9/barrel, making us increasingly resilient in times of lower margins. $2-3 billion annual capital investment programme, primarily focused on strengthening further the resilience of our Refining portfolio. ROACE between 10% and 15% a year over the cycle. Chemicals: a growth priority and resilient business Earnings expected to reach $3.5-4.0 billion a year by 2025. Growth driven by: Global demand for petrochemicals (expected to be at least 3% per year); $3-4 billion annual capital investment, primarily focused on growth through uniquely differentiated world-scale projects; and $0.5 billion improvement in annual earnings (vs. 2015), achieved by increasing the returns of our base business through cost-reduction and margin-improvement interventions. Some of these improvements have already been delivered. By the end of 2018, we expect to have delivered 80% of this; Identified opportunities to continue to grow beyond 2025. Value, competitiveness and strategic fit with the world-class investment case will be key decision criteria. ROACE of the base of our Chemicals business around 15% by 2025, with total ROACE dependent on total investment levels in Chemicals in the 2020s.