“We have delivered solid earnings with robust free cash flow, despite weak energy demand and low oil prices. We remain committed to the safety of our people while delivering on our long-term value -creation strategy for all of our shareholders."
Saudi Aramco, the world’s biggest oil company, has announced net profits of US$16.7 billion for the first quarter of 2020, a period that saw the beginning of the collapse in demand in global oil markets because of the lockdowns in all major economies.
In accordance with the levels indicated at the time of Saudi Aramco’s initial public offering last December, Aramco paid a dividend of US$13.4 billion in the quarter, and declared it would pay US$18.75 billion to shareholders in the next quarter — the biggest dividend of any listed company in the world.
That result — the first time Aramco has reported financials as a publicly listed company — was down nearly 25% compared to the same period last year, but was significantly less than the fall in oil prices, which roughly halved over the three-month period. Revenues were down by some 16% at US$60.2 billion.
On the Saudi Stock Exchange (Tadawul), Saudi Aramco shares rose 1.29% to SR31.3 (US$8.33) on the results announcement.
“The COVID-19 crisis is unlike anything the world has experienced in recent history, and we are adapting to a highly complex and rapidly changing business environment,” said Saudi Aramco President and CEO Amin Nasser.
“Aramco has demonstrated resilience during economic cycles, and has an unparalleled position due to a strong balance sheet and low-cost structure.
“We have delivered solid earnings with robust free cash flow, despite weak energy demand and low oil prices. We remain committed to the safety of our people while delivering on our long-term value-creation strategy for all of our shareholders,” he added.
Excellence, flexibility, and resilience are our core strengths. They give us a unique ability to weather challenging times.
— Aramco (@Aramco) May 12, 2020
Cash flow from operating activities came to US$22.4 billion, around US$7 billion more than Shell, its closest rival in terms of cash flow.
Shell recently dropped its dividend for the first time in 75 years. Aramco’s profits were more than double those of the five big oil companies combined.
Our Q1 2020 earnings reflect our strength, resilience, and reliability during these challenging times, as we continue to achieve strong results for our shareholders.
Find out more about our Q1 2020 financial results:
— Aramco (@Aramco) May 12, 2020
Nasser said he expects further challenging conditions in oil markets.
“Looking ahead to the remainder of 2020, we expect the impact of the pandemic on global energy demand and oil prices to weigh on our earnings,” said Nasser.
“We continue to reinforce the business during this period by reducing our capital expenditure and driving operational excellence. Longer term, we remain confident that demand for energy will rebound as global economies recover.”
Capital expenditure will be held between US$25 billion and US$30 billion for the rest of the year, but is under review for next year and beyond, Aramco said.
“We retain significant flexibility to adjust expenditures, and have considerable experience in managing the business through times of adversity,” Nasser said. “This resilience will enable us to continue delivering on our commitments to our shareholders.”