COVID-19 hit Aramco hard, but the company still made a profit of $ 49 billion and will pay shareholders dividends worth $ 75 billion.
Saudi Arabian state oil giant Aramco reported a 44.4 percent drop in net profit last year as the coronavirus pandemic limited global demand.
The effect of COVID-19 took a heavy toll on the company and its peers in 2020, but oil prices rose this year as economies recovered from the downturn and after oil producers extended production cuts.
“Aramco had a net revenue of $ 49 billion in 2020,” the company said in a statement on Sunday, compared to $ 88.2 billion in 2019.
It is said that ‘revenues were affected by lower crude oil prices and volumes sold, and margins of refining and chemicals’.
Amin Nasser, CEO of Aramco, describes 2020 as ‘one of the most challenging years in recent history’.
But compared to many of its international loss-making competitors, the company, which made its stock market in 2019, played ‘strong’ financial resilience ‘despite the challenges, saying shareholders would still receive a $ 75 billion dividend in total.
“We are delighted that there are signs of a recovery,” Nasser said in a call. ‘China is also very close to pre – pandemic levels. In Asia in particular, East Asia in particular, there is a strong increase in demand. ”
He said demand in Europe and the United States would improve with more vaccine deployments against COVID-19. Global oil demand is expected to reach 99 million barrels per day by the end of this year, he added.
Crude prices have risen to more than $ 60 a barrel in recent weeks.
‘Huge impact’ from COVID
Analysts believe the company’s debt levels rose last year because it offered shareholders an extraordinary dividend, even as its earnings fell.
Aramco has reduced its capital expenditure extension in 2021 to about $ 35 billion from a range of $ 40 billion to $ 45 billion previously, according to an announcement to the kingdom’s Tadawul Stock Exchange. Capital expenditure in 2020 was $ 27 billion.
Referring to the dividend, Nasser said it did not intend to increase it this year as promised.
“The dividend is in line with expectations, and this is what Aramco’s holders will care about most, but lower capital taxes imply that the company does not expect high oil prices to last in the long run,” said Hasnain Malik, head of equities. research at Tellimer.
Aramco’s shares fell 0.6 percent after the results.
For most of last year, Aramco’s shares held up well against global oil companies in emerging and developed markets, but underperformed its peers as oil prices recovered.
Without addressing the company’s debt, Aramco’s Nasser said the belt tightening kept the company’s financial position ‘robust’, making it possible to pay out the dividends.
“As we have felt the enormous impact of COVID-19 on the global economy, we have strengthened our emphasis on capital and operational efficiency,” Nasser said.
Aramco has also cut hundreds of jobs because it wants to cut costs, Bloomberg News reported in June last year.
But there are also concerns about the increase in drone and rocket attacks on Aramco’s facilities in the kingdom, which are alleged by Yemen’s Houthi rebels.
A drone caused a fire at an oil refinery in Riyadh on Friday in the second major attack this month on Saudi energy facilities claimed by the Iranian group.