Aramco hit hard by oil price slump
DUBAI: Saudi Arabian state oil giant Aramco yesterday reported a 25% fall in first-quarter net profit, missing analyst estimates, but its quarterly dividend was in line with a plan for a $75 billion base payout to shareholders for the year.
Brent crude prices fell 65.6% in the first quarter, before Opec+ producers agreed to cut oil supply by a record 9.7 million barrel per day starting from May to help shore up plunging prices and curb oversupply.
Net profit fell to 62.48 billion riyals ($16.64 billion) after zakat and tax for the quarter to March 31 from 83.29 billion a year earlier.
Analysts had expected a profit of $17.8 billion, according to the mean estimate from Egyptian investment bank EFGHermes, Saudi Arabia’s Al Rajhi Capital and Dubai-based Arqaam Capital.
The oil company, which went public last year, has said total dividends of $13.4 billion were paid in the first quarter, in respect of the fourth quarter of 2019.
Dividends of $18.75 billion for the first quarter of 2020 “are the highest of any listed company worldwide” and will be paid in the second quarter, Aramco said. It gave no more details.
The dividend payment is in line with its plan to pay a base dividend of $75 billion for the year. Analysts were expecting a cut in the dividend to the Saudi government, but that the company was likely to maintain payouts to minority shareholders.
Aramco did not make any announcement on its future dividend policy, however.
The company said the results reflected “lower crude oil prices, as well as declining refining and chemicals margins and inventory re-measurement losses.”
“Looking ahead to the remainder of 2020, we expect the impact of the Covid19 pandemic on global energy demand and oil prices to weigh on our earnings,” Aramco’s CEO Amin Nasser said in a statement.
“We continue to reinforce the business during this period by reducing our capex and driving operational excellence. Longer term we remain confident that demand for energy will rebound as global economies recover.”