Saudi Aramco Maintains Dividend Despite Steep Drop in Quarterly Profit
Saudi Aramco released its Q1 financials this week, reporting a 25% drop in net profit for the quarter due to the steep fall in crude oil prices since the start of the year. The company’s net profit for the period stood at approximately SAR62.5 billion, significantly lower than the SAR83.3 billion reported for the corresponding period last year.
However, despite the drop in earnings, the world’s largest and most profitable oil company assured investors that its dividend payout for the quarter will be in line with its previous plans to pay US$75 billion in annual dividends this year. “We have delivered solid earnings with robust free cash flow, despite weak energy demand and low oil prices,” Saudi Aramco President & CEO Amin H. Nasser said in a statement that accompanied the release of the results.
The international benchmark Brent crude oil price declined over 65% to hit its lowest in over two decades last month, falling to around US$16 per barrel on April 22nd. Prices have since recovered to around US$30 per barrel, primarily on the back of a production cut agreement between the OPEC+ group of producers that came in to effect at the beginning of May.
While the Company stated that it would distribute US$18.75 billion in dividends for the first quarter, it did not rule out a dividend cut later this year. Analysts had expected Saudi Aramco, which went public last year, to maintain payouts to minority shareholders while cutting dividends paid to the Saudi government.
Despite the challenge of low oil prices, Saudi Aramco’s financial position remains strong relative to international peers, with the company reporting free cash flow of SAR56.3 billion during Q1, down from SAR65.1 billion over the same period last year.