Saudi Aramco half-year profits plunge 50% from virus impact

Andrew Cummings
August 10, 2020

Energy giant Saudi Aramco said on Sunday its net profit for the second quarter plunged a massive 73 percent year-on-year due to sharply lower oil prices.

"We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business", Nasser said.

Most energy companies have taken a painful blow from the coronavirus pandemic as lockdowns to contain the spread of the deadly virus limited travel and halted production, crushing demand for crude and sending oil prices into a tailspin. "Look at China, their gasoline and diesel demand is nearly at pre-coronavirus levels. We are seeing that Asia is picking up and other markets [too]", he told reporters after announcing the company's quarterly results.

"This demonstrates Aramco's agility, strength and resilience across market cycles", Nasser added, who made the payment despite calls for it to be scaled back.

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

Saudi Aramco, which Apple recently dethroned as the world's most valuable listed company, said net income in the three months ending in June was 24.6 billion riyals (S$9 billion), down 73 per cent from a year earlier.

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

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

Aramco's shares rose 0.3 per cent to 33.05 riyals in Riyadh as of 12.25pm yesterday.

USA technology firm Apple last week replaced Aramco as the world´s most valuable company after its capitalisation grew to $1.9 trillion, compared to $1.76 trillion for Aramco.

Aramco's net profit for the first half of the year also dived, by 50% to $23.2 billion, compared to $46.9 billion over the same period last year.

Nasser said Aramco would distribute $18.75 billion in dividends for the second quarter to keep its listing promise of distributing at least $75 billion in annual dividends for five years.

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 Two. Saudi Aramco completed acquisition of a 70 per cent interest in Sabic in June.

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