Saudi Aramco has reported a 25 per cent drop in first-quarter earnings in the face of the collapse in oil prices and plunging demand arising from the COVID-19 pandemic
Announcing its first quarter results on 12 May, the oil giant reported net income of US$16.7bn in the first three months of this year, down from US$22.2bn in the same period a year ago, as lockdowns and travel restrictions to contain the virus hit global demand. The company also highlights declining refining and chemicals margins and inventory re-measurement losses.
Cash flow from operating activities stood at US$22.4bn in the first quarter, compared to US$24.5bn in the same period of 2019, while free cash flow was US$15.0bn, compared to US$17.4bn in the same period last year. Saudi Aramco said it will pay US$18.8bn in dividends for the first quarter.
Amin Nasser, Saudi Aramco’s chief executive, said, “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. Aramco has demonstrated resilience during economic cycles and has an unparalleled position due to a strong balance sheet and low-cost structure.
“We retain significant flexibility to adjust expenditures and have considerable experience in managing the business through times of adversity. This resilience will enable us to continue delivering on our commitments to our shareholders.
“Looking ahead to the remainder of 2020, we expect the impact of the COVID-19 pandemic on global energy demand and oil prices to weigh on our earnings. We continue to reinforce the business during this period by reducing our capex and driving operational excellence. Longer term we remain confident that demand for energy will rebound as global economies recover.”
In light of market conditions and recent commodity price volatility, the company continues to expect capital spending for 2020 to be between US$25bn and US$30bn, compared with US$33bn in 2019. Capital expenditures for 2021 and beyond remain under review.
