Saudi Aramco To Pay US$75 Billion Dividend Despite Profit Crashing By 73% In Second Quarter 2020

Saudi Arabia’s state oil giant, Saudi Aramco, has had its profit plunged by 73 percent in the second quarter of 2020 due to slump in energy demand and prices triggered by the coronavirus pandemic.

Despite the huge decline in the company’s profit, Amin Nasser, who is the CEO, says Aramco will go ahead with its plan to pay US$75 billion in dividends this year.

Aramco, which listed in Riyadh last year in a record US$29.4 billion flotation, said the rapid spread of COVID-19 globally had significantly reduced demand for crude oil, natural gas and petroleum products.

Nasser told reporters on Sunday, August 9, 2020, that he had seen a partial recovery in the energy market and a pick up in demand as economies gradually open after the easing of coronavirus lockdowns.

“Look at China, their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets (too),” he told reporters after announcing the company’s quarterly results.
“As countries ease the lockdown, we expect the demand to increase,” he added.

Nasser said Aramco was committed to its 2020 dividend.

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

The group’s dividends play a critical role in helping the Saudi government to manage its fiscal deficit.

Aramco reported a 73.4 percent fall in second quarter net profit, a steeper drop than analysts had forecast, and said it expected capital expenditure for 2020 to be at the lower end of a US$25 billion to US$30 billion range.
Net profit fell to 24.6 billion riyals (US$6.57bn) for the quarter to June 30 from 92.6 billion riyals a year earlier.

Analysts had expected net profit of 31.3 billion riyals, according to the mean estimate from three analysts, provided by Refinitiv.

“Aramco figures are healthy compared to other global peers,” Mazen al-Sudairi, Head of Research at Al Rajhi Capital, said.

“This was the worst quarter in the modern history of the oil industry, and surviving it with healthy figures points to a very positive outlook.”

Aramco shares were up about 0.4 percent in early trade. The group is currently the world’s second most valuable publicly traded company after Apple.

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

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

Aramco’s free-cash flow stood at US$6.1 billion in the second quarter and US$21.1 billion for the first half of 2020, respectively, compared with US$20.6 billion and US$38 billion for the same periods in 2019.

Aramco’s gearing ratio was 20.1 percent at the end of June, mainly reflecting the deferred consideration for the acquisition of Saudi Basic Industries Corp and the consolidation of SABIC’s net debt on to Aramco’s balance sheet.

Source:www.energynewsafrica.com