Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Saudi Aramco profit falls 25% but dividend in line with planned payout for year

CommoditiesMay 12, 2020 06:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Branded oil tanks at a Saudi Aramco oil facility in Abqaiq 2/2

By Hadeel Al Sayegh and Rania El Gamal

DUBAI (Reuters) - Saudi Aramco (SE:2222), the world's top oil exporting company, on Tuesday 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 payout for the year.

Analysts had expected Aramco, which went public last year, to maintain payouts to minority shareholders while cutting the dividend to the Saudi government, whose finances have been battered by plunging oil prices amid the coronavirus pandemic.

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 from May to help shore up prices and curb oversupply. [O/R]

Despite the drop in profit, the state oil giant's cashflow remained strong compared to other oil majors, reflecting its strong balance sheet and resilience. https://tmsnrt.rs/2LjZQ4D

Shares of Aramco were up 1.3% at 31.30 riyals at 0825 GMT, still trading below the IPO price of 32 riyals. Aramco's 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 riyals a year earlier, below estimates by analysts who expected a profit of $17.8 billion.

Aramco said total dividends of $13.4 billion were paid for the fourth quarter of 2019 and that it would distribute a dividend of $18.75 billion for the first quarter of this year. This is in line with its plan to pay a base dividend of $75 billion for 2020.

The Q1 dividends "are the highest of any listed company worldwide" and will be paid in the second quarter, Aramco said.

It did not make any announcement on its future dividend policy, however. [nL8N2CT5JA]

Yousef Husseini, an analyst EFG Hermes, said though there was no change to the dividend policy in the first quarter, he still expects the share of the dividend paid to the government, which remains the biggest shareholder, will be reduced.

“They will cut the share of the government in the second quarter but there is some upside if they renegotiate the SABIC deal which could save them some cashflow," he said.

Aramco said earlier on Tuesday that its planned acquisition of a 70% equity stake in Saudi petrochemical maker SABIC is on track to close in the second quarter. Sources told Reuters this week that the $70 billion deal was likely to be restructured.

SUPPLY CUT PACT

Aramco's cash flows from operating activities, stood at $22.4 billion in the first quarter, compared to $24.5 billion in the same period of 2019, the company said. It said free cash flow was $15 billion, compared to $17.4 billion in Q1 2019.

In comparison Royal Dutch Shell (LON:RDSa) reported cash flows of just below $15 billion in the first quarter of this year, the highest among the Western oil majors.

Aramco had kept its oil output at around 9.8 million barrels per day during the first three months of the year under the OPEC+ supply cut pact, before opening the oil taps in April after the collapse of earlier supply cut talks in early March.

On Monday, Saudi Arabia said it would deepen output cuts in June beyond its quota under the latest OPEC+ deal to help drain a supply glut, prompting a rise in crude prices.

"On the balance sheet, Aramco continues to maintain its strength despite the reduction in oil prices," said Mazen Alsudairi, head of research at Al Rajhi Capital in Riyadh.

Aramco said its results reflected lower oil prices, declining refining and chemicals margins and "inventory re-measurement losses".

"Looking ahead to the remainder of 2020, we expect the impact of the COVID-19 pandemic on global energy demand and oil prices to weigh on our earnings," Aramco's CEO Amin Nasser said.

"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."

Aramco said it continues to expect capital spending for 2020 to be between $25 billion and $30 billion. Capital expenditures for 2021 and beyond remain under review. Capital expenditures in the first quarter were $7.4 billion, compared to $7.2 billion for the same period in 2019, Aramco said.

Aramco's gearing - net debt divided by balance sheet capital - was minus 4.9% at end March, down from minus 0.2% at the end of 2019, reflecting the strength of the company's balance sheet.

Saudi Aramco profit falls 25% but dividend in line with planned payout for year
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
David Knight
David Knight May 12, 2020 8:00AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
trump can just take more american money and give it away to foreign leaders.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email