Saudi Aramco to Retain $ 75 Billion Dividend Despite Falling Profits | Business

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The Saudi Arabian state oil giant still plans to pay its shareholders $ 75 billion (£ 57 billion) this year, even as the impact of the coronavirus caused its last quarter profits to drop by 73% .The global slowdown in demand for oil during the coronavirus pandemic lowered Saudi Aramco’s second-quarter net profit to $ 6.57 billion, from $ 24.7 billion in the same period last year and $ 16.6 billion in the first quarter of 2020.

Amin Nasser, chairman and chief executive officer of Aramco, blamed “reduced demand and falling oil prices” for his financial results in the second quarter, during which global demand for oil fell to record highs. low for 25 years and market prices have fallen by three quarters.

Aramco became the most valuable listed company in history when it went public in Saudi Arabia last year, with the biggest profits in the world. However, it has since been overthrown by tech giant Apple as Covid-19 wreaks havoc on the oil industry.

Aramco will continue to fund the world’s largest shareholder dividend with a quarterly payment of $ 18.75 billion to shareholders, including the Saudi state which relies heavily on the oil giant for its revenue to support its economy.

Along with its multibillion-dollar dividend, the oil giant paid Saudi Arabia’s health ministry $ 50 million to fund its pandemic response, and matched staff donations to pay $ 3.5 million. dollars to purchase supplies for over 20,000 “deserving households, including orphans and widows, across the Kingdom.”

This is the second quarter in a row that Aramco’s earnings have fallen below its quarterly dividend, suggesting the company can count on borrowings to keep its dividend policy intact.

Aramco’s debt soared to a ratio of 20% of its market value, largely because it agreed to pay the Saudi sovereign wealth fund $ 69 billion for a controlling stake in Saudi chemical company Sabic earlier this year. year. At the start of the year, the ratio was negative at 5%.

Aramco said he could see “a partial recovery” in the global oil market as countries “take steps to ease restrictions and restart their economies.”

The global oil price fell from a 21-year low of $ 16 a barrel in April this year to over $ 45 a barrel after Saudi Arabia helped negotiate a deal between Opec and its allies to curb oil production during the pandemic in order to maintain market prices. afloat.

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“We are determined to emerge stronger from the pandemic and will continue to move forward on our long-term strategic journey, through continued investments in our business,” said Nasser.

Aramco has weathered the global oil industry crisis better than other major oil companies, as its reserves are among the cheapest sources of oil in the world.

Oil rivals BP, Shell and ExxonMobil all reported heavy losses for the last quarter and recorded record write-downs on the value of their oil and gas assets due to collapsing oil prices.

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