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Home / Business / Saudi Aramco’s profits plummeted, oil market showing signs of recovery

Saudi Aramco’s profits plummeted, oil market showing signs of recovery



DUBAI – Saudi Aramco National Oil Company ‘profit fell 73% in Q2 this year, due to energy demand and falling prices due to the coronavirus crisis affecting the revenue of the world’s largest oil exporter. .

But the company is stuck with a plan to pay $ 75 billion in dividends this year, and CEO Amin Nasser said global oil demand is recovering.

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All major oil companies were hit in the second quarter as shutdowns to stop the coronavirus from traveling, which reduced oil consumption and sent prices down to levels not seen in nearly two decades. .

Aramco, a Riyadh-listed company last year with a record $ 29.4 billion increase, said the rapid spread of COVID-1

9 globally has significantly reduced demand for crude oil and gas. natural and petroleum products.

On December 11, 2019, Saudi Arabia’s state oil and gas company Aramco and stock market officials celebrate during the official ceremony marking the launch of the initial public offering. public of Aramco on the stock exchange of Riyadh, in Riyadh, Saudi Ar

Nasser told reporters he had seen a partial recovery in energy markets and rising demand as economies gradually opened up after loosening the coronavirus lockdown.

“Look at China, their gasoline and diesel demand is almost at the level before COVID 19. We see that Asia is growing and other markets (too),” he told reporters later. when announcing quarterly business results of the company.

“As countries relax close-offs, we expect demand to increase.”

Aramco has pledged to pay dividends in 2020, Nasser said.

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“We plan to pay $ 75 billion, subject to board approval and market conditions,” he said.

Group dividends play a key role in helping the Saudi government manage its financial deficit.

Aramco reported a 73.4% drop in second-quarter net profit, a steeper decline than analysts’ forecast and said it expected capital spending for 2020 to be lower in the 25 billion range. to 30 billion USD.

Net profit fell to 24.6 billion riyals ($ 6.57 billion) in the quarter to June 30 from 92.6 billion riyals a year earlier.

Analysts had expected a net profit of 31.3 billion riyals, according to average estimates from three analysts provided by Refinitiv.

On Thursday, December 12, 2019, a photograph, a trader talking to others in front of a display of Saudi stock market values ​​at the Arab National Bank in Riyadh, Saudi Arabic. (AP Photo / Amr Nabil, File)

“Aramco’s numbers are good compared to other companies globally,” said Mazen al-Sudairi, research lead at Al Rajhi Capital. “This was the worst quarter in the modern history of the oil industry, and its existence through healthy figures shows a very positive outlook.”

Aramco shares were up about 0.4% in early trading. The conglomerate is currently the world’s second most valuable publicly traded company after Apple.

Aramco said it will pay a dividend of $ 18.75 billion for the second quarter of this year, in line with its plan to pay a dividend of $ 75 billion for 2020.

BP earlier this month cut its dividend for the first time in a decade after a record second-quarter loss, while Royal Dutch Shell in April cut its dividend for the first time since World War Two.

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Aramco’s free cash flow stood at $ 6.1 billion in the second quarter and $ 21.1 billion for the first half of 2020, compared with $ 20.6 billion and $ 38.0 billion for the same period in 2019.

Aramco’s payout ratio was 20.1% at the end of June, mainly reflecting a review of postponing the acquisition of Saudi Basic Industries Corp and SABIC’s net debt consolidation into Aramco’s balance sheet. (1 dollar = 3,7501 riyals)

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