Aramco maintains dividend despite slump in 2020 profits
The world's biggest oil company Saudi Arabia said on March 21 it would maintain its 2020 dividend plan despite reporting a steep fall in profits for the year.
Net income came to $49bn last year, marking a 44% decline from $88.2bn in 2019. Revenues tumbled to $229.9bn from $329.8bn, owing to weaker oil prices and production decline, while operating costs came to $127.7bn, versus $149.8bn a year before.
"In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its considerable financial and operational agility," company CEO Amin Nasser said. "As the enormous impact of Covid-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies. As a result, our financial position remained robust and we declared a dividend of $75bn for 2020."
Aramco promised to pay $75bn in dividends to shareholders when it held its initial public offering (IPO) in December 2019. The Saudi government sold a 1.5% stake in the company for $25.6bn, making it the world's largest ever IPO. The Kingdom's Crown Prince Mohammed bin Salman said earlier this year that there would be more share offerings in the coming years, to expand the country's Public Investment Fund.
Saudi Arabia and other Opec+ members agreed in mid-April to take an unprecedented 9.7mn barrels/day of oil supply offline to rebalance the market following the onset of the coronavirus pandemic. The group began restoring some production in August, but significant restrictions remain in place.
Aramco produced 12.4mn b/d of oil equivalent last year, including 9.2mn b/d of crude oil, versus 13.2mn b/d of oil equivalent in 2019. Saudi Arabia has taken on greater cuts than its fair share in order to keep the Opec+ alliance together. It pledged to take an extra 1mn b/d of its supply offline at the start of February, while allowing Russia and Kazakhstan to return some output.
Oil prices have seen a significant recovery this year, although some of these gains were lost last week. Brent dropped from $68/b on March 17 to $63.3/b on March 18, amid signs of demand weakening in key markets. The benchmark is currently trading at $64.12/b down 0.64% from the close on March 19.