Saudi Arabian state oil giant Aramco on Tuesday reported a 25 percent fall in first-quarter net profit, below analyst estimates, after it was hurt by a plunge in crude oil prices as the coronavirus slashed demand.
Brent crude prices fell 65 percent in the first quarter before the world’s top oil producers, including Saudi Arabia and Russia, agreed to cut oil supply by a record 9.7 million barrels per day (bpd) starting from May to help shore up prices and curb oversupply.
Aramco’s net profit fell to 62.48 billion riyals ($16.64bn) after state and religious taxes for the quarter to March 31 from 83.29 billion riyals ($22.17bn) a year earlier.
Analysts had expected a profit of $17.8bn, according to the mean estimate from Egyptian investment bank EFG-Hermes, Saudi Arabia’s Al Rajhi Capital, and Dubai-based Arqaam Capital.
Aramco said the results reflected “lower crude oil prices, as well as declining refining and chemical margins” among other financial pressures.
“Looking ahead to the remainder of 2020, we expect the impact of the COVID-19 pandemic on global energy demand and oil prices to weigh on our earnings,” Aramco’s CEO Amin Nasser said in a statement.
Aramco had kept its oil output at approximately 9.7 million BPD during the first three months of the year under an agreement among members of the Saudi-led Organization of Petroleum Exporting Countries (OPEC) and its allies, before opening the oil taps in April after the collapse of earlier supply cut talks in early March.
The world’s top oil-producing company, which went public last year, has said total dividends of $13.4bn were paid in the first quarter, in respect of the fourth quarter of 2019. Dividends of $18.75bn will be paid in the second quarter.
Aramco’s cash flows from operating activities, stood at $22.4bn in the first quarter, compared with $24.5bn in the same period of 2019, the company said.
The national oil giant plans to acquire a stake in Saudi petrochemical maker SABIC for about $70bn, though sources told the Reuters News Agency this week that the deal was likely to be restructured with the slump in oil prices due to the coronavirus.
Aramco said earlier on Tuesday its planned acquisition of a 70 percent equity stake in SABIC is on track to close in the second quarter.