Shell's stock price hits a record high, but ongoing losses in chemical operations remain a concern

Economics Observer Network As of February 11, 2026, Shell (SHEL.N) closed at $80.23, reaching a record high, with a year-to-date increase of 9.19%. Its stock performance has diverged from the ongoing losses in its chemical business. Whether it can continue to shake off the chemical drag requires a comprehensive assessment of the following factors:

Company Fundamentals

Continuous Losses: The chemical division has reported four consecutive years of annual losses, with an adjusted full-year loss of $1.12 billion in 2025, and a quarterly loss of $589 million in Q4.

Low Profit Margins: In 2025, the global chemical business had an average profit margin of $148 per ton, down $4 year-over-year, with further decline to $140 per ton in Q4.

Asset Restructuring Initiatives: The company has sold its loss-making assets in Singapore and plans to evaluate high-cost facilities in Europe and North America (such as the Monaca plant in the U.S.), potentially shutting down or divesting them.

Reasons for Stock Price Movements

Strategic Shift: The company is prioritizing the development of liquefied natural gas (LNG) and low-carbon energy, planning to allocate 10% of capital expenditure in 2030 to low-carbon businesses, and aiming to increase shareholder returns to 40-50% of operating cash flow.

Financial Resilience: In Q3 2025, free cash flow reached $10 billion, supporting a dividend yield of 3.60% and share repurchase plans.

Market Optimism: Institutional confidence in LNG demand growth and cost reductions (targeting a cumulative $5-7 billion in cost savings) has partially offset the negative impact of the chemical business.

Recent Company Status

Legacy Chemical Issues: European facilities face high energy costs and carbon tariffs. Slow divestment progress could continue to drain cash flow (chemical plant utilization was only 76% in 2025).

Financial Pressure: The chemical division needs to achieve “free cash flow near break-even.” If industry profit margins remain depressed long-term, restructuring costs could weigh on overall profitability.

Valuation Risks: The current trailing twelve months (TTM) P/E ratio is 13.37. If chemical losses widen or divestments lead to one-time impairments, valuation upside could be limited.

Future Outlook

Shell’s record stock high is mainly driven by steady energy core operations and strategic transformation expectations, but chemical losses remain a potential drag. In the short term, attention should be paid to the progress of chemical restructuring in 2026 (such as plant shutdown plans and cost reduction effects). Long-term sustainability depends on whether LNG growth can fully offset the contraction in chemical operations. Investors should closely monitor the company’s upcoming financial reports and management’s timeline for chemical asset disposals.

The above content is compiled from publicly available information and does not constitute investment advice.