COVID-19 took a heavy loss for Aramco, but the company still made a profit of $ 49 billion and will pay shareholders dividends in the amount of $ 75 billion.
Saudi Arabian state oil giant Aramco reported a 44.4 percent drop in net profit last year as the coronavirus pandemic restricted global demand.
The effect of COVID-19 had a strong impact on the company and its peers in 2020, but oil prices have soared this year as economies recover from the recession and after oil producers have extended production cuts.
“Aramco made a net profit of $ 49 billion in 2020,” the company said in a statement on Sunday, compared to $ 88.2 billion in 2019.
He said that “revenues were impacted by lower crude oil prices and volumes sold, and weaker 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-generating international peers, the company, which made its debut in the stock market in 2019, emphasized its “strong financial resilience” despite the challenges and said shareholders would still receive dividends totaling $ 75 billion .
“We are pleased that there are signs of recovery,” said Nasser in a results conference call. “China is also very close to pre-pandemic levels. Therefore, in Asia, particularly in East Asia, there is a strong recovery in demand ”.
He said that demand in Europe and the United States would improve with more implantation of vaccines against COVID-19. Global oil demand is expected to reach 99 million barrels per day by the end of this year, he added.
Oil prices have risen in recent weeks to more than $ 60 a barrel.
COVID ‘huge impact’
Analysts say the company’s debt levels rose last year, when it offered shareholders a large amount of dividends, even as its profits declined.
Aramco reduced its capital expenditure guidance in 2021 to about $ 35 billion, from a range of $ 40 billion to $ 45 billion previously, according to a release to the kingdom’s Tadawul 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 promised.
“The dividend is in line with expectations, which is what Aramco holders are most concerned about, but lower capex implies that the company does not expect oil prices to last in the long term,” said Hasnain Malik, head of research of Tellimer shares.
Aramco’s shares fell slightly 0.6 percent after its results.
For most of last year, Aramco’s shares held up well with global oil companies in emerging and developed markets, but underperformed their peers when oil prices rebounded.
Without addressing the company’s debt, Nasser of Aramco said that the belt tightening kept the company’s financial position “robust”, allowing it to pay dividends.
“As the huge impact of COVID-19 has been felt across the global economy, we have intensified our strong emphasis on operational and capital efficiency,” said Nasser.
Aramco also cut hundreds of jobs to cut costs, Bloomberg News reported last June.
But there are also concerns about an increase in drone and missile attacks on Aramco’s facilities in the kingdom, claimed by Yemen’s Houthi rebels.
A drone attack triggered a fire at a Riyadh oil refinery on Friday, the second major attack this month on Saudi energy facilities claimed by the Iran-aligned group.