Aramco’s first quarter profit down by 19%

Saudi oil giant’s net profit was 3.75% higher than in the fourth quarter

PHOTO: AFP

DUBAI:

Saudi oil giant Aramco’s first quarter net profit dropped 19% from a year earlier to 119.54 billion riyals ($31.88 billion), it said on Tuesday, due to lower crude prices.

Profit still beat analysts’ median forecast of $30.8 billion, according to Refinitiv data, and Aramco said the decline was partially offset by lower taxes including in the zakat Islamic tax and a rise in finance and other income.

Net profit was 3.75% higher than in the fourth quarter.

Yousef Husseini, head of materials at EFG Hermes Research, said there was no material surprise in Aramco’s results, “with the company performing in line with its ability at prevailing oil prices and taking into account production cuts.”

“But, the real positive surprise, which we think will be well received by the market, is that Aramco finally decided to up its dividend policy and include a clear link to its performance.”

Aramco’s shares closed the day up 3.2% at 33.6 riyals a share after rising as much as 7.2% earlier in the session.

Aramco said it will pay $19.5 billion in dividends for the first quarter, in line with the previous quarter.

CEO Amin Nasser said in a statement that Aramco was looking at introducing performance-linked dividends, in addition to its base distribution.

The additional payouts would target 50%-70% of annual free cash flow, net of the base dividend and other amounts including external investments, the company said.

The world’s top oil exporter made a record profit of over $161 billion for 2022 on higher energy prices and production.

Last month, Saudi Arabia and other OPEC+ producers announced surprise oil production cuts from May, initially driving up prices, but global economic uncertainty and an unclear demand outlook continue to weigh on prices.

Crude petroleum and natural gas contributed 32.7% of Saudi Arabia’s gross domestic product last year, with petroleum refining making up another 6%.

Published in The Express Tribune, May 10th, 2023.

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