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Sudden drop in profits of Aramco, Saudi oil giant

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                The energy giant Saudi Aramco announced on Sunday a drop of 44.4% in its net profit in 2020, weighed down by the fall in crude oil prices accentuated by the Covid-19 pandemic, which has weighed heavily on global demand.
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                                    <p>When the Covid-19 pandemic has an impact on the major players in the hydrocarbons market.  Saudi energy giant Aramco announced Sunday, March 21, a drop in its net profit in 2020. The company "achieved a net profit of 49 billion dollars (41 billion euros) in 2020", against 88 , $ 2 billion (73.8 billion euros) the previous year, she said in a statement.

The world’s largest exporter of crude oil, Saudi Arabia was hit last year by low oil prices and sharp cuts in production.

“Revenues have been affected by lower crude oil prices and volumes sold, as well as reduced margins on refining and chemicals,” says the company, which says it “has demonstrated strong financial resilience in one of the most difficult times for the industry “.

In recent weeks, crude prices have risen above $ 60 a barrel, a first in a year, but analysts believe that possible new waves of Covid-19 contamination could jeopardize the timid global economic recovery.

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Saudi Aramco, considered Saudi Arabia’s cash cow, has revealed two consecutive annual declines in profits since the company began reporting 2019 results. ‘ambitious multi-billion dollar plans to diversify its oil-dependent economy.

>> To read: Saudi Aramco, the most profitable company in the world, but still not the most transparent

Last year, the energy juggernaut had already posted annual net profit for 2019 down 20.6% compared to 2018.

Dividends paid, capital expenses reduced

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Despite the situation, Aramco has claimed to have paid out $ 75 billion in dividends to its shareholders, an amount that exceeds reported profit, as it pledged when it went public with great fanfare in 2019.

The oil giant debuted on the Riyadh stock exchange in December 2019 following a then-record IPO, which generated $ 29.4 billion from the sale of 1.725% of its shares.

Despite the pandemic, “we have placed even more emphasis on the profitability of our capital and our operational efficiency”, enough to allow the payment of dividends, said Aramco CEO Amin Nasser. The dividend payments are helping the Saudi government, the company’s largest shareholder, manage the kingdom’s abysmal budget deficit.

>> To read: Saudi Aramco, itinerary of a failed IPO

The Saudi giant, on the other hand, will cut its capital spending in 2021. “The company (…) expects its capital spending for 2021 to be around $ 35 billion, much less than the roughly 40-45 billion dollars. of dollars “initially considered,” the statement said.

An obstacle for the diversification of the Saudi economy

To cope with the moribund economic situation, Aramco also cut hundreds of jobs to cut costs, the Bloomberg agency reported in June.

The sharp drop in oil revenues is expected to hamper the ambitious plans of Crown Prince Mohammed bin Salman, as the diversification of the economy he advocates must be largely financed by energy revenues.

In January, he announced his country’s intention to sell more Aramco shares in the coming years, with the money generated to be transferred to the Public Investment Fund, the main instrument of the country’s diversification policy. economy of the country.

But given the economic and health situation, these sales of additional shares may not arouse the interest of investors, analysts say.

With AFP

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Source site www.france24.com

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