Saudi oil giant Aramco’s profits plunge nearly 45% amid pandemic | Business and economic news
COVID-19 took a heavy toll on Aramco, but the company still made a profit of $ 49 billion and will pay shareholders dividends worth $ 75 billion.
Saudi state oil giant Aramco reported a 44.4% drop in net profit last year as the coronavirus pandemic dampened global demand.
The effect of COVID-19 took a heavy toll on the company and its peers in 2020, but oil prices have recovered this year as economies recover from the recession and oil producers extended their cutbacks. production.
“Aramco achieved net profit of $ 49 billion in 2020,” the company said in a statement on Sunday, up from $ 88.2 billion in 2019.
He said that “revenues have been affected by lower crude oil prices and volumes sold, and weakening refining and chemicals margins.”
Aramco CEO Amin Nasser described 2020 as “one of the most difficult years in recent history”.
But relative to many of its loss-making international peers, the company, which debuted on the stock exchange in 2019, has played on its “strong financial resilience” despite the challenges and said shareholders will still receive dividends totaling $ 75 billion.
“We are happy that there are signs of recovery,” Nasser said on a call for results. “China is also very close to pre-pandemic levels. Thus, in Asia, in East Asia in particular, there is a strong recovery in demand. “
He said demand in Europe and the United States would improve with more deployment of COVID-19 vaccines. Global oil demand is expected to reach 99 million barrels per day by the end of this year, he added.
Crude prices have risen in recent weeks to over $ 60 a barrel.
“ Huge impact ” of COVID
Analysts say the company’s debt levels rose last year as it offered shareholders a bumper dividend even as its profits plummeted.
Aramco has lowered its forecast for capital spending in 2021 to around $ 35 billion, from a range of $ 40 billion to $ 45 billion previously, according to a disclosure to the kingdom’s Tadawul Stock Exchange. Capital spending in 2020 was $ 27 billion.
Referring to the dividend, Nasser said there was no intention to increase it this year from what had been promised.
“The dividend is in line with expectations, which will be of most interest to Aramco holders, but lower capex means the company does not expect high oil prices to last for the long term,” Hasnain said. Malik, Head of Equity Research at Tellimer.
Aramco shares edged down 0.6% after its results.
For most of the past year, Aramco shares have held up well against global oil companies in emerging and developed markets, but have underperformed their peers when oil prices rallied.
Without settling the company’s debt, Aramco’s Nasser said the tightening of the belt had kept the company’s financial position “strong”, allowing it to pay dividends.
“As the enormous impact of COVID-19 rippled across the global economy, we stepped up our focus on capital and operational efficiency,” Nasser said.
Aramco has also cut hundreds of jobs in an attempt to cut costs, Bloomberg News reported in June.
But there are also concerns about an increase in drone and missile attacks against Aramco facilities in the kingdom, claimed by Houthi rebels in Yemen.
A drone strike sparked a fire at an oil refinery in Riyadh on Friday, in the second major assault this month on Saudi energy facilities claimed by the Iran-aligned group.