COVID-19 severely affected Aramco, but the company continued to make a profit of $ 49 billion and will pay dividends of $ 75 billion to shareholders.
Saudi Arabia’s oil giant Aramco reported a 44.4 percent drop in net profit last year as the coronavirus pandemic reduced global demand.
The COVID-19 effect has severely affected the company and its colleagues in 2020, but oil prices have recovered this year as economies recover from the recession and as oil producers have extended production cuts.
“Aramco has a net income of $ 49 billion in 2020,” the company said in a statement on Sunday, down from $ 88.2 billion in 2019.
He said that “revenues were affected by lower crude oil prices and volumes sold and weakening refining and chemical margins”.
Aramco CEO Amin Nasser described 2020 as “one of the most challenging years in recent history.”
But compared to many of its loss-making international counterparts, the company, which debuted on the stock market in 2019, has played its “strong financial resistance” despite the challenges and said shareholders will continue to receive full dividends. of $ 75 billion.
“We are pleased that there are signs of recovery,” Nasser said in a call for victory. “China is also very close to pre-pandemic levels. So in Asia, especially in East Asia, there is a strong increase in demand. ”
He said demand in Europe and the United States will improve with greater use 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 oil prices have risen in recent weeks to more than $ 60 a barrel.
The “enormous impact” of COVID
Analysts say the company’s debt level rose last year, giving shareholders a quick dividend even as its earnings fell.
Aramco has reduced its capital spending guidelines in 2021 to about $ 35 billion, from $ 40 billion to $ 45 billion previously, according to a disclosure to the Tadawul Kingdom Stock Exchange. Capital expenditures in 2020 were $ 27 billion.
Referring to the dividend, Nasser said there was no intention to increase it this year from what was guaranteed.
“The dividend is in line with expectations, which will be the main concern of Aramco holders, but lower capital means the company does not expect high oil prices to last long,” said Hasnain Malik, head of capital research. on Tellimer.
Aramco shares fell marginally by 0.6 percent after its results.
For most of last year, Aramco’s stock held well against global oil companies in emerging and developed markets, but outperformed its counterparts when oil prices recovered.
Without addressing the company’s debt, Nasser of Aramco said the belt tightening kept the company’s financial position “robust”, allowing it to pay dividends.
“As the enormous impact of COVID-19 has been felt throughout the global economy, we have intensified our strong emphasis on capital and operational efficiency,” Nasser said.
Aramco has also cut hundreds of jobs as it tries to cut costs, Bloomberg News reported in June last year.
But there are also concerns about increased drone and missile attacks on Aramco facilities in the kingdom, claimed by Yemen’s Houthi rebels.
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 Iranian-aligned group.