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Saudi Aramco reports a 30% decline in net profit after first half of the year

Autor: Financial Market
3 min

Saudi Aramco, one of the world’s largest integrated energy and chemicals companies in the world announced second quarter and half year 2023 results that were heavily impacted by the decline in oil prices.

The company reported a 30% decline in net profit after the first six months ($61,96 B vs $87,91 B in the same period of 2022) due to global crude oil prices decrease in the second quarter of 2023 as inflationary pressure contributed to economic uncertainty.

Despite this, Aramco declared a base dividend of SAR 73.2 billion ($19.5 billion) for the second quarter.

Following the announcement in the first quarter of Aramco’s intention to introduce a mechanism for performancelinked dividends, and in recognition of the Group’s performance, the Company intends to calculate the first performance-linked dividends based on the combined full-year results of 2022 and 2023.

The Company expects these performance-linked dividends to be calculated based on 70% of the Group’s combined full-year free cash flow for 2022 and 2023, net of the base dividend and other amounts including external investments.

Financial highlights

• Net income: $30.1 billion (Q2) / $62.0 billion (H1)
• Cash flow from operating activities: $33.6 billion (Q2) / $73.3 billion (H1)
• Free cash flow: $23.2 billion (Q2) / $54.1 billion (H1)
• Gearing ratio down to -10.5% as balance sheet continues to strengthen
• Sustainable and progressive dividend: Q1 2023 base dividend of $19.5 billion paid in the second quarter, up 4.0% year-on-year, and Q2 2023 dividend of $19.5 billion to be paid in the third quarter
• Company intends to distribute performance-linked dividends over six quarters from Q3 2023. First distribution of approximately $9.9 billion in Q3 2023 based on combined full-year 2022 results and half-year 2023 results
• Upstream oil and gas developments on track, including the Marjan, Berri, Dammam, and Zuluf crude oil increments, as part of broader capacity expansions
• Downstream growth strategy advances with award of engineering, procurement, and construction contracts for the $11.0 billion Amiral petrochemicals complex

Aramco believes demand for oil, gas, and chemicals will remain strong over the medium- to long-term. During the quarter, capital expenditures were SAR 39.2 billion ($10.5 billion) reflecting Aramco’s aim to capture growth opportunities and maximize value from its integrated portfolio.

Aramco seeks to strategically deleverage its balance sheet to maintain a high investment-grade credit rating and optimize funding costs. In May, the Company made a final prepayment of the deferred consideration related to the SABIC acquisition in the amount of SAR 16.7 billion ($4.5 billion), to fully reduce the outstanding principal amounts of promissory notes of SAR 18.7 billion ($5.0 billion).

Our strong results reflect our resilience and ability to adapt through market cycles. We continue to demonstrate our long-standing ability to meet the needs of customers around the world with high levels of reliability.

For our shareholders, we intend to start distributing our first performance-linked dividend in the third quarter. “At Aramco, our mid to long-term view remains unchanged. With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security.

We are maintaining the largest capital spending program in our history, with the aim of increasing our oil and gas production capacity and expanding our Downstream business — with petrochemicals projects, such as our $11.0 billion expansion of the SATORP refinery with TotalEnergies, essential to meet future demand.

At the same time, we remain optimistic about the potential for new technologies to reduce our operational emissions, and our recent blue ammonia shipments to Asia highlight the growing market interest in the potential of alternative, lowercarbon energy solutions,” Amin H. Nasser President and CEO.