Royal Dutch Shell plc (ADR) (RDS.A)’s Turnaround Is Result Of Taking The Long Term View

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) was reportedly one of the most mismanaged companies in the world. But ever since it came under the leadership of Ben Van Beurden, the oil and gas company has been reinventing itself in a huge way. Royal Dutch Shell’s Chief Executive Officer discussed with Jim Cramer about his company’s fantastic turnaround story on CNBC’s Mad Money.

Royal Dutch Shell plc (ADR) (NYSE:RDS-A)

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)’s change in top management brought with it a change of culture. As an insider, it must have been tough on Van Beurden when he decided to carry out the hard choices such as selling off a huge amount of assets which were not performing well and give more attention to the free cash flow and profitability.

“[...] Being an insider means you know the company, know the opportunities, you know the areas where we can be sharp ,where we can do better. I think that is the strength I bring to Royal Dutch Shell [...],” he told Cramer.

Cramer noted that Royal Dutch Shell plc (ADR) (NYSE:RDS.A) had shifted its priorities to cash flows, increased asset sales and reduced pace of growth of investment. Van Beurden explained that these changes positively complemented an operationally competent company such as Royal Dutch Shell, which can now focus on value without having to chase growth for growth’s sake.

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has traditionally been doing business in places where it is considered relatively tough to carry on a business. They operate in markets such as Russia and Nigeria. Van Beurden considers that this policy made better sense if you have the big picture in mind, as Royal Dutch Shell does.

“If you are in a business where your gestation periods are typically a decade and then you can enjoy it perhaps for another 30 or 40-50 years, you have to take a long term view, and that is exactly what we do,” he added.

Disclosure: none

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