- Analysts had expected to see a drop in net profit this quarter from a year earlier as inflation and rising interest rates put pressure on global demand and stoke fears of a recession.
- Still, Aramco’s net profit beat expectations by $30.5 billion, which was expected by Reuters analysts.
- Aramco’s first-quarter dividend, which was increased in the fourth quarter to $19.5 billion, will be paid in the second quarter, the company said.
DUBAI, United Arab Emirates — Saudi oil giant Aramco reported a 19% drop in first-quarter profits on Tuesday, posting net profit of $31.9 billion from $39.5 billion a year earlier in a context of falling oil prices.
Analysts had expected to see a drop in net profit this quarter from a year earlier as inflation and rising interest rates put pressure on global demand and stoke fears of a recession. Still, Aramco’s net profit beat expectations by $30.5 billion, which was expected by analysts polled by Reuters.
The company’s net profit rose 3.75% from the fourth quarter. He said the weaker profit result was offset by lower taxes and higher financial and other income. Shares rose 3.2% in early trading in Riyadh on Tuesday.
Aramco’s first-quarter dividend, which was increased in the fourth quarter to $19.5 billion, will be paid in the second quarter, the company said. It reported quarterly cash flow from operating activities at $39.6 billion and free cash flow at $30.9 billion, both up slightly from a year earlier.
Aramco, which is the world’s largest oil exporter, also revealed on Tuesday that it will start paying a performance dividend on top of that $19.5 billion and will target between 50% and 70% of its figure. business available. This dividend will be paid quarterly and at the sole discretion of the company’s board of directors, based on the company’s performance, he said.
An offshore drilling rig sits in the shallow waters of the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia, Wednesday, October 3, 2018.
Simon Dawson | Bloomberg | Getty Images
Aramco CEO Amin Nasser has highlighted the value of its downstream strategy, which has seen it invest heavily in petrochemicals and other operations.
“We are leveraging advanced technologies to increase liquid-to-chemical capacity and meet anticipated demand for petrochemicals,” Nasser said.
Nasser underscored the continued importance of hydrocarbons to global energy needs, adding that “we believe that oil and gas will remain essential components of the global energy mix for the foreseeable future.”
He said the company is “moving forward” with its capacity expansion and its “long-term outlook remains unchanged.”
Aramco reported record net profit of $161.1 billion for 2022 in March, up 46.5% on the year.
Saudi Arabia’s Basic Industries Corporation (SABIC), which is one of the world’s largest petrochemical companies and is 70% owned by Aramco, saw its net profit plunge 90% in the first quarter this month and warned that margins would remain under pressure amid new capacity, rising interest rates and uncertainty surrounding global growth.
Oil and gas prices surged in early 2022 as Western sanctions against Russia following its full-scale invasion of Ukraine gradually tightened access to crude supplies. But this year, so far, tells a different story for the awards.
The international benchmark Brent oil price is down 9% year-to-date and more than 17% year-on-year. This fall stems from a combination of economic concerns.
Earlier this month, the US Federal Reserve raised interest rates by a quarter of a percentage point, raising fears among investors that slowing economic growth could lower demand for energy .
“Pressure from anti-inflationary actions taken by both the US Fed and the ECB (European Central Bank) has resulted in lackluster demand growth for most OECD countries, with downside risks of recession. coming,” wrote Ed Morse, global head of commodities research at Citi. in a note this week.
— CNBC’s Lee Ying Shan contributed to this report.