Aramco Profits Sink 25% in Q1

Net profits at Saudi oil giant Saudi Aramco fell 25% year on year (yr/yr) in the first quarter, coming in at riyals 62.5bn ($16.7bn), as the oil price collapse in March took its toll.

Earnings before interest and taxes were down 23% at riyals 128.3bn, while free cash flow shrank 13.5% to riyals 56.3bn. The company sold its oil at an average price of $51.8/b, versus $63.6 a year earlier.

Aramco said its results reflected "lower crude oil prices, as well as declining refining and chemicals margins," among other financial pressures. But it nevertheless described its performance as "exceptionally strong" given the circumstances, citing its "prudent balance sheet management and low-cost structure."

The company said it would pay out $18.75bn in dividends from its first-quarter earnings, in line with its earlier pledge of a $75bn payout for the total year. The payments to shareholders for the three months ending March 31 were "the highest of any listed company worldwide" and would be made in the second quarter, Aramco said.

"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," CEO Amin Nasser said in a statement. "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 has capped its capital expenditure in 2020 at $25-30bn, down from $32.8n in 2019 and $35.1bn in 2018.

The company, responsible for all Saudi Arabia's oil output, flowed 9.8mn b/d of crude in the quarter. It opened the taps in April after the previous Opec+ agreement on supply cuts expired. But it is obliged to keep supply at under 8.5mn b/d in May and June, under the latest Opec+ deal. Aramco said on May 11 it would lower production even further to 7.5mn b/d in June to support prices.