Saudi Aramco’s net profit drops 45% in the third quarter on weak oil demand


Saudi Aramco’s net profit fell 44.6% in the third quarter of 2020 compared to the same period last year, reflecting continued damage to oil demand and prices from the global coronavirus pandemic, APA-Economics reports citing CNBC.

Net profit dropped to 44.21 billion riyals ($11.8 billion) this quarter from 79.84 billion riyals in the third quarter of 2019.

The figure is in line with analyst estimates, revealing a recovery from the historic revenue drop in the second quarter that saw profits plummet to 24.75 billion riyals.

The Saudi kingdom’s state oil company saw lower crude oil prices and volumes sold, as well as weaker refining and chemicals margins, the company said in its release Tuesday. It also saw a decrease in oil production royalties, a drop in the royalty rate from 20% to 15%, and lower income taxes and zakat (Islamic taxes).

The national producer has maintained its third-quarter dividend of $18.75 billion, to be paid in the fourth quarter. Its second-quarter dividend was declared at the same level in August, also to be paid in the following quarter. Aramco’s first quarter dividend was paid in the second quarter.

Aramco listed 1.5% of its shares locally on the Saudi Tadawul last year, which analysts say has reshaped many of the company’s priorities, including that of its commitment to shareholders.

“Aramco has made this very strong dividend commitment to shareholders as part of the IPO,” Neil Beveridge, a senior oil and gas analyst at Bernstein, told CNBC’s “Capital Connection” on Tuesday.

“And that really was a cornerstone promise I think, for any investor that was investing in Saudi Aramco and that’s something that … the company will want to sustain, along the lines that they committed to in the IPO.”