Saudi Aramco Q2 profit collapses by 73% but dividend remains

Saudi Aramco has reported a 73% plunge in profit for the second quarter of 2020, when the COVID-19 pandemic precipitated a collapse in demand for oil as economies around the world went into lockdown.

However, the Saudi state-owned energy giant maintains it will pay out US$75 billion in dividends this year, while CEO Amin Nasser yesterday said global oil demand was recovering, particularly in Asia.

“Look at China, their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets (too),” said Nasser after announcing the company’s quarterly results. “As countries ease the lockdown, we expect the demand to increase,” he added.

Aramco’s Q2 net profit fell to $6.57 billion, a steeper drop than analysts had forecast. The company also said it expected capital expenditure for 2020 to be at the lower end of a $25-30 billion range.

“Aramco figures are healthy compared to other global peers,” Mazen al-Sudairi, head of research at Al Rajhi Capital, said. “This was the worst quarter in the modern history of oil industry, and surviving it with healthy figures points to a very positive outlook.”

Last week, BP slashed its dividend in half following a record $6.7 billion H2 loss and Royal Dutch Shell cut its dividend in April for the first time since World War Two.