Oil Giant Saudi Aramco Q2 Profits Down 73%

Oil Giant Saudi Aramco Q2 Profits Down 73%

Oil giant Saudi Aramco has released its results for Q2, 2020 showing its profits down a massive 73% as the impact of the coronavirus hits its bottom line.

The challenge for Saudi Aramco has come on a number of fronts: the oil company is facing a drop in energy demand, historically-low oil prices and a trade market in disarray with the COVID-19 pandemic. 

The impact was clear on Saudi Aramco’s second-quarter results, with profit down 73%, however, the oil giant has said it intends to pay out the massive $75 billion it owes investors in dividends. 

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Net profit for the oil producer was down from 92.6 billion riyals ($24.6 billion) in 2019 to just 24.6 billion riyals ($6.57 billion) for the quarter. Saudi Aramco added that it expects capital expenditure rates for 2020 to sit anywhere between $25-30 billion. 

This was significantly lower than the forecasted net profit of 31.3 billion riyals ($8.3 billion) anticipated by analysts studying Saudi Aramco’s movements. 

We reported just last week that technology company Apple had overtaken Saudi Aramco to reclaim its spot as the world’s most valuable company, after Apple hit a market valuation of $1.84 trillion, with Saudi Aramco in second-place with a market valuation of $1.76 trillion. 

The pandemic has had a massive impact on oil companies worldwide, due to significantly lowered demand for oil from the aviation industry, which is typically a regular and bulk-buyer of oil. This has seen the price for oil drop to near two-decade lows, and the margin for oil producers becoming even thinner. 

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Oil Giant Saudi Aramco Q2 Profits Down 73%

Amin Nasser, CEO of Saudi Aramco has said that the company forecasts a recovery in the energy market as economies around the world begin to open up again. 

“Look at China,” he said, “their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets, too.” 

“As countries ease the lockdown we expect the demand to increase,” he said, adding that “we intend to pay the $75 billion, subject to board approval and market conditions.” 

Nasser concluded that Saudi Aramco was “determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world.” 

A report from Reuters quotes Mazen al-Sudairi, head of research at Al Rajhi Capital who said that “Aramco figures are healthy compared to other global peers.”

“This was the worst quarter in the modern history of the oil industry, and surviving it with healthy figures points to a very positive outlook,” he said. 

According to that same report from Reuters, “Aramco’s free cash flow stood at $6.1 billion in the second quarter and $21.1 billion for the first half of 2020, respectively, compared with $20.6 billion and $38.0 billion for the same periods in 2019.” 

Oil Giant Saudi Aramco Q2 Profits Down 73%

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