Saudi Aramco profit crashes 73% amid signs of recovery

RIYADH: State oil giant Saudi Aramco’s profit has plunged 73 percent in the second quarter of the year amid a slump in energy demand and prices due to the coronavirus crisis.

All major oil companies have taken a hit in the second quarter as lockdowns to contain the coronavirus limited travel, which reduced oil consumption and sent prices tumbling to levels not seen in nearly two decades.

Aramco, which listed in Riyadh last year in a record $29.4bn flotation, will stay with plans to pay $75bn in dividends this year. The company said the rapid spread of COVID-19 globally had significantly reduced demand for crude oil, natural gas and petroleum products.

CEO Amin Nasser said global oil demand was recovering and he had seen a partial recovery in the energy market and a pick up in demand as economies gradually open after the easing of lockdowns.

“Look at China, their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets (too),” he told reporters after announcing the company’s quarterly results. “As countries ease the lockdown, we expect the demand to increase.”

Nasser said Aramco was committed to its 2020 dividend. “We intend to pay the $75bn, subject to board approval and market conditions,” he said. The group’s dividends play a critical role in helping the Saudi government to manage its fiscal deficit.

Aramco reported a 73.4 percent fall in second-quarter net profit and said it expected capital expenditure for 2020 to be at the lower end of a $25bn to $30bn range. Net profit fell to 24.6 billion riyals ($6.57bn) for the quarter to June 30 from 92.6 billion riyals a year earlier.

Aramco shares were up about 0.4 percent in early trade. The group is currently the world’s second most valuable publicly traded company. Aramco said it will pay a dividend of $18.75bn for the second quarter of this year, in line with plans for a $75bn dividend for 2020.

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 II.