saudia aramco's profit grows

Saudi Aramco’s net profit for the quarter was US$25.5 billion, compared with US$6.6 billion in the same period in 2020. The results exceeded expectations, and analysts expect the median net profit for the quarter to be $24.7 billion.

Saudi Arabia’s state-owned oil giant Aramco reported that its net profit in the second quarter increased by 288% to US$25.5 billion, while maintaining its dividend of US$18.8 billion.

Saudi Aramco’s net profit for the quarter was US$25.5 billion, compared with US$6.6 billion in the same period in 2020. The results exceeded expectations, and analysts expect the median net profit for the quarter to be $24.7 billion.

Saudi Aramco said that the net profit in the first half of this year was 47.2 billion US dollars, compared with 23.2 billion US dollars in the first half of 2020, an increase of 103%. The company said that the global relaxation of Covid-19 restrictions, vaccination campaigns, stimulus measures, and the acceleration of key market activities have all supported this result.

Dividend Plan

Saudi Aramco responded that its dividend for the quarter remained at a “normal level”, but it will “make recommendations on whether it will stick to the current dividend plan later.”

Saudi Aramco, in which the Saudi government holds a majority stake, is the country’s main source of income. “All of this will be reviewed with our board of directors, and we will decide later whether there is any additional dividend distribution,” Nasser said.

Price Outlook

Oil prices soared by about 40% to about US$70 per barrel in 2021, prompting oil giants BP, Chevron and Royal Dutch Shell to raise their dividends and initiate a share repurchase program.

“Our expectation is that the recovery will continue,” Nasser said. “We are seeing more economies opening up, and we expect demand to reach around 99 million barrels by the end of the year… and next year’s total demand is forecasted to be 100 million barrels,” he added.

Saudi Aramco also stated that it has reduced its debt-to-asset ratio (mainly the ratio of company debt financing to shareholder equity financing) from 23% on December 31, 2020 to 19.4% on June 30. The main reasons for the decrease are higher cash and cash equivalents and stronger operating cash flow, as well as gains related to Saudi Aramco’s recent crude oil pipeline transaction.

Capital expenditure in the second quarter was US$7.5 billion, and capital expenditure in the first half of 2021 was US$15.7 billion, an increase of 20% and 15% respectively. Saudi Aramco said that capital expenditures in 2021 are expected to be approximately US$35 billion.

“We continue to advance a series of strategic plans that focus on sustainability and low-carbon fuels, maximize the value of our assets, and advance our downstream integration and expansion journey,” Nasser added.

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