Saudi Aramco reports 20.6 percent drop in 2019 profit
Saudi Aramco on Sunday reported a 20.6 percent drop in its net profit for 2019 due to low oil prices and production levels, the company said in a statement.
Riyadh: Saudi Aramco on Sunday reported a 20.6 percent drop in its net profit for 2019 due to low oil prices and production levels, the company said in a statement.
These are the first annual results to be announced by the energy giant after its historical USD 29.4 billion initial public offering and listing on the Saudi Tadawul market last December.
Aramco posted net profits of USD 88.2 billion last year compared to USD 111.1 billion in 2018, Monday's statement said.
"The decrease was primarily due to lower crude oil prices and production volumes, coupled with declining refining and chemical margins," it said.
The company also made USD 1.6 billion of impairment provisions for losses associated with Sadara Chemical Company, an Aramco subsidiary.
"2019 was an exceptional year for Saudi Aramco. Through a variety of circumstances -- some planned and some not -- the world was offered unprecedented insight into Saudi Aramco's agility and resilience," CEO Amin Nasser said.
"Our unique scale, low costs, and resilience came together to deliver both growth and world-leading returns, while also maintaining our position as one of the world's most reliable energy companies," Nasser said.
The earnings for last year are not affected by the coronavirus outbreak or the ongoing price war between Saudi Arabia and Russia that has sent oil prices crashing.
Aramco said it will distribute dividends worth USD 73.2 billion for 2019 but based on its commitments under the IPO, its dividends for the next five years starting this year will be at least USD 75 billion.
It said its capital spending last year dropped to 32.8 billion from USD 35.1 billion in 2018.
The company expects capital spending, which is expenditure on projects, to be between USD 25 billion and 30 billion this year "in light of current market conditions and recent commodity price volatility."
But it said that capital expenditure for 2021 and beyond is currently under review.
The results were announced amid a price war between Saudi Arabia and Russia after they failed to agree on additional output cuts to support prices dented by the outbreak of the coronavirus pandemic.
"The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape," Nasser said.
The kingdom said last week Aramco will pump 12.3 million barrels of oil per day, boosting output by at least 2.5 million bpd.
It also announced plans to raise production capacity from 12 million bpd to 13 million bpd.
Forecasts for future crude prices and demand are also bleak.
In its latest monthly report, the Organization of Petroleum Exporting Countries lowered its forecast for global average daily demand by 0.92 million barrels to 99.73 million barrels.
Saudi Arabia is also in the midst of a royal purge that saw King Salman's brother and nephew detained after sources said they were accused of plotting a palace coup to unseat the crown prince, heir to the Saudi throne.
Aramco shares rallied immediately after the listing on December 11, rising by 19 percent to 38 riyals (USD 10.1) and temporarily lifting the company's valuation above the USD 2 trillion mark, which was sought by Crown Prince Mohammed bin Salman, Saudi Arabia's de facto ruler.
But as oil prices tumble, Aramco shares have lost 29 percent from its highest point, slipping below the listing price.
On Thursday, Aramco's market value dropped to around USD 1.55 trillion, but it still remains the world's largest publicly listed company.