COVID-19 took a heavy toll on Aramco however the firm nonetheless made a revenue of $49bn and can pay shareholders dividends price $75bn.
Saudi Arabian state oil large Aramco has reported a 44.4 % plunge in final yr’s web revenue, because the coronavirus pandemic curbed international demand.
The impact of COVID-19 took a heavy toll on the corporate and its friends in 2020, however oil costs have rallied this yr as economies get well from the downturn and after oil producers prolonged output cuts.
“Aramco achieved a web revenue of $49bn in 2020,” the corporate stated in an announcement on Sunday, down from $88.2bn in 2019.
It stated “revenues have been impacted by decrease crude oil costs and volumes offered, and weakened refining and chemical compounds margins”.
Aramco CEO Amin Nasser described 2020 as “one of the difficult years in current historical past”.
However in contrast with a lot of its loss-generating worldwide friends, the corporate, which made its inventory market debut in 2019, performed up its “robust monetary resilience” regardless of the challenges and stated shareholders would nonetheless obtain dividends totalling $75bn.
“We’re happy that there are indicators of a restoration,” Nasser informed an earnings name. “China can be very near pre-pandemic ranges. So in Asia, East Asia particularly, there’s robust pick-up in demand.”
He stated demand in Europe and america would enhance with extra deployment of vaccines towards COVID-19. World oil demand is anticipated to succeed in 99 million barrels per day by the top of this yr, he added.
Crude costs have risen in current weeks to greater than $60 per barrel.
‘Monumental influence’ of COVID
Analysts say the corporate’s debt ranges surged final yr because it provided shareholders a bumper dividend at the same time as its earnings plunged.
Aramco lowered its steering for capital expenditure in 2021 to round $35bn from a variety of $40bn to $45bn beforehand, in keeping with a disclosure to the dominion’s Tadawul bourse. Capital spending in 2020 was $27bn.
Referring to the dividend, Nasser stated there was no intention to extend it this yr from what has been pledged.
“The dividend is in keeping with expectations, which is what holders of Aramco will care about most, however decrease capex implies the corporate doesn’t count on excessive oil costs to final for the long-term,” stated Hasnain Malik, head of fairness analysis at Tellimer.
Aramco’s shares have been marginally down 0.6 % after its outcomes.
By most of final yr, Aramco’s shares held up properly towards international oil firms in rising and developed markets, however underperformed towards its friends when oil costs recovered.
With out addressing the corporate’s debt, Aramco’s Nasser stated belt-tightening had saved the agency’s monetary place “sturdy”, enabling it to pay out the dividends.
“As the large influence of COVID-19 was felt all through the worldwide economic system, we intensified our robust emphasis on capital and operational efficiencies,” Nasser stated.
Aramco has additionally slashed a whole bunch of jobs because it seeks to scale back prices, Bloomberg Information reported final June.
However there are additionally considerations over an uptick in drone and missile assaults on Aramco’s services within the kingdom, claimed by Yemen’s Houthi rebels.
A drone strike sparked a fireplace at a Riyadh oil refinery on Friday, within the second main assault this month on Saudi vitality installations claimed by the Iranian-aligned group.