Saudi Aramco Profits Dip, See Signs of Oil Market Recovery

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DUBAI – Profits of state-owned oil giant Saudi Aramco fell 73% in the second quarter of the year, as lower energy demand and prices from the coronavirus crisis hit sales of the most the world’s largest oil exporter.

But the company has maintained its intention to pay out $ 75 billion in dividends this year, and CEO Amin Nasser has said global demand for oil is picking up.

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All major oil companies were hit in the second quarter as lockdowns to contain the coronavirus restricted travel, slashing oil consumption and pushing prices down to levels not seen in nearly two decades.

Aramco, which was listed in Riyadh last year in a record $ 29.4 billion IPO, said the rapid spread of COVID-19 around the world has dramatically reduced demand for crude oil, gas natural and petroleum products.

In this file photo from December 11, 2019, Saudi Arabia’s state-owned oil company Aramco and stock market officials celebrate during the official ceremony marking the start of Aramco’s IPO on the Stock Exchange of Riyadh, in Riyadh, Saudi Arabia

Nasser told reporters he had seen a partial recovery in the energy market and a pickup in demand as economies gradually opened after the coronavirus lockdowns were eased.

“Look at China, their demand for gasoline and diesel is almost at pre-COVID 19 levels. We are seeing Asia recovering and other markets (too),” he told reporters after speaking. announced the company’s quarterly results.

“As countries ease the lockdown, we expect demand to increase.”

Nasser said Aramco is committed to paying its 2020 dividend.

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

The group’s dividends play a vital role in helping the Saudi government manage its budget deficit.

Aramco reported a 73.4% drop in second-quarter net profit, a sharper drop than analysts had expected, and said it expected capital spending for 2020 to be in. the lower end of a $ 25 to $ 30 billion range.

Net profit fell to 24.6 billion riyal ($ 6.57 billion) for the quarter as of June 30, from 92.6 billion riyal a year earlier.

Analysts expected net profit of 31.3 billion riyals, according to the three analyst average estimate provided by Refinitiv.

In this Thursday, December 12, 2019, file photo, a trader talks with others in front of a screen displaying Saudi stock market values ​​at the Arab National Bank in Riyadh, Saudi Arabia. (AP Photo / Amr Nabil, file)

“Aramco’s numbers are healthy compared to other global peers,” said Mazen al-Sudairi, head of research at Al Rajhi Capital. “This was the worst quarter in modern history for the oil industry, and surviving it with healthy numbers indicates a very positive outlook.”

Aramco shares rose about 0.4% in early trade. The group is currently the second largest listed company in the world after Apple.

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

Earlier this month, BP cut its dividend for the first time in ten years after a record second quarter loss, while Royal Dutch Shell cut its dividend in April for the first time since World War II.

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Aramco’s free cash flow was $ 6.1 billion in the second quarter and $ 21.1 billion in the first half of 2020, respectively, compared to $ 20.6 billion and $ 38.0 billion. billion dollars for the same periods in 2019.

Aramco’s debt ratio was 20.1% at end-June, primarily reflecting the deferred consideration for the acquisition of Saudi Basic Industries Corp and the consolidation of SABIC’s net debt in Aramco’s balance sheet ($ 1 = 3.7501 riyals).

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