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Saudi Aramco’s profits show signs of recovery in the oil market



DUBAI – State oil giant Saudi Aramco’s profit fell 73% in the second quarter of the year as declining energy demand and prices following the coronavirus crisis hit sales at the world’s largest oil exporter.

But the company remained in plans to pay $ 75 billion in dividends this year, and CEO Amin Nasser said global oil demand was recovering.

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All major oil companies took a hit in the second quarter as a blockade to restrict travel by coronavirus, which reduced oil consumption and sent prices to fall to levels not seen for nearly two decades.

Aramco, which was registered in Riyadh last year with a record flotation of $ 29.4 billion, said the rapid spread of COVID-19 worldwide has significantly reduced demand for crude oil, natural gas and petroleum products.

In this December 11, 2019 submit photo, the state oil company Aramco and the state oil companies in Saudi Arabia celebrate during the official ceremony on the occasion of the debut of the initial public offering of Aramco on the Riyadh Stock Exchange, in Riyadh, Saudi Arabia

Nasser told reporters that he had seen a partial recovery in the energy market and an increase in demand as economies gradually reopened as the coronavirus blockade eased.

“Look at China, their gasoline and diesel consumption is almost at pre-COVID 19. We see Asia gaining other markets (too),” he told reporters after announcing the company’s quarterly results.

“While the parties facilitate the blockade, we expect demand to increase.”

Nasser said Aramco is committed to its 2020 dividend.

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“We intend to pay $ 75 billion, depending on the board’s approval and market conditions,” he said.

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

Aramco reported a 73.4% drop in net profit in the second quarter, a sharper decline than analysts had predicted, and said it expects capital spending for 2020 to be at the lower end of the $ 25 billion to $ 30 billion range.

Net profit fell to 24.6 billion riyals ($ 6.57 billion) for the quarter to June 30 from 92.6 billion riyals a year earlier.

According to the average estimates of three analysts provided by Refinitive, analysts expected a net profit of 31.3 billion riyals.

This Thursday, December 12, 2019, submit a photo of a trader talking to others in front of a screen showing the values ​​of Saudi stock markets at the Arab National Bank in Riyadh, Saudi Arabia. (AP Photo / Amr Nabil, File)

“Aramco’s figures are strong compared to other counterparts around the world,” said Mazen al-Sudairi, head of research at Al Rajhi Capital. “This was the worst quarter in the modern history of the oil industry and its survival with healthy figures shows a very positive outlook.”

Shares of Aramco rose about 0.4% in early trading. The group is currently the second most valuable publicly traded company after Apple.

Aramco has said it will pay a dividend of $ 18.75 billion for the second quarter of this year, in line with a $ 75 billion dividend plan for 2020.

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

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Aramco’s free cash flow was $ 6.1 billion in the second quarter and $ 21.1 billion in the first half of 2020, compared to $ 20.6 billion and $ 38.0 billion for the same periods in 2019. г.

Aramco’s transfer ratio was 20.1% at the end of June, reflecting mainly the deferred remuneration for the acquisition of Saudi Basic Industries Corp and the consolidation of SABIC’s net debt to Aramco’s balance sheet ($ 1 = 3.7501 riyals).

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