The profit of the state oil giant Saudi Aramco fell 73 percent in the second quarter, because a drop in energy demand and prices due to the crisis in coronavirus hit sales at the world’s largest oil importer.
But the company stuck with plans to pay $ 75 billion in dividends this year and CEO Amin Nasser said on Sunday that global oil demand had recovered.
All major oil companies took a hit in the second quarter as lockdowns to contain the coronavirus limited journey, which reduced oil consumption and sent prices to levels not seen in nearly two decades.
Aramco, which reported a record $ 29.4 billion fleet in Riyadh last year, said the rapid spread of COVID-19 worldwide had significantly reduced demand for crude oil, natural gas and petroleum products.
Nasser told reporters that he had seen a partial recovery in the energy market and a pick-up in demand as economies gradually opened up after the coronavirus’s lockdown.
“Look at China, its demand for gasoline and diesel is almost at pre-COVID 19 levels. We see Asia catching up and other markets (too),” he told reporters after announcing the company’s quarterly results.
“As countries make the lockdown easier, we expect demand to increase.”
Nasser said Aramco is committed to its 2020 dividend.
“We intend to pay the $ 75 billion, subject to board approval and market conditions,” he said.
The group’s dividends play a critical role in helping the Saudi government manage its fiscal deficit.
Aramco reported a 73.4 percent drop in second-quarter net profit, a steeper drop than analysts had predicted, and said it expects capital expenditures by 2020 to reach the lower end of a range of $ 25 billion to $ 30 billion were.
Net profit fell to 24.6 billion riyals ($ 6.57bn) for the quarter to June 30 from 92.6 billion riyals a year earlier.
Analysts expected a net profit of 31.3 billion riyals, according to the average estimate of three analysts, provided by Refinitiv.
“Aramco figures are healthy compared to other global peers,” said Mazen al-Sudairi, head of research at Al Rajhi Capital. “This was the worst quarter in the modern history of the oil industry, and survival with healthy figures indicates a very positive outlook.”
Aramco shares were up about 0.4 percent in early trading. The group is currently the second most valuable publicly traded company in the world after Apple.
Aramco said it will pay a $ 18.75 billion dividend for the second quarter of this year, in line with plans for a $ 75 billion dividend by 2020.
BP cut its dividend earlier this month for the first time in a decade after a record second-quarter loss, while Royal Dutch Shell cut its dividend for the first time since World War II in April.
Aramco’s free cash flow in the second quarter stood at $ 6.1 billion and $ 21.1 billion for the first half of 2020, compared to $ 20.6 billion and $ 38 billion for the same periods in 2019.
Aramco’s co – operation ratio at the end of June was 20.1 per cent, which probably reflects the proposed consideration for the acquisition of Saudi Basic Industries Corp and the consolidation of SABIC’s net debt on Aramco’s balance sheet.
SOURCE:
Reuters news agency
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