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GuruFocus has detected 7 Warning Signs with Royal Dutch Shell PLC $RDS.A.
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Royal Dutch Shell PLC (NYSE:RDS.A)
Gross Profit
$49,025 Mil (TTM As of Dec. 2016)

Royal Dutch Shell PLC's gross profit for the three months ended in Dec. 2016 was $14,861 Mil. Royal Dutch Shell PLC's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $49,025 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Royal Dutch Shell PLC's gross profit for the three months ended in Dec. 2016 was $14,861 Mil. Royal Dutch Shell PLC's revenue for the three months ended in Dec. 2016 was $67,092 Mil. Therefore, Royal Dutch Shell PLC's Gross Margin for the quarter that ended in Dec. 2016 was 22.15%.

Royal Dutch Shell PLC had a gross margin of 22.15% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Royal Dutch Shell PLC was 20.48%. The lowest was 16.61%. And the median was 17.97%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Royal Dutch Shell PLC's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=240033 - 191008
=49,025

Royal Dutch Shell PLC's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=67092 - 52231
=14,861

Royal Dutch Shell PLC Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 9681 (Mar. 2016 ) + 11833 (Jun. 2016 ) + 12650 (Sep. 2016 ) + 14861 (Dec. 2016 ) = $49,025 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Royal Dutch Shell PLC's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=14,861 / 67092
=22.15 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Royal Dutch Shell PLC had a gross margin of 22.15% for the quarter that ended in Dec. 2016 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Royal Dutch Shell PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 59,08583,79354,57570,51887,89285,76078,01474,02849,41749,025

Royal Dutch Shell PLC Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 17,76313,06114,76615,00310,1539,4959,68111,83312,65014,861
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