Energy
Tuesday, November 7th, 2023 3:01 pm EDT
Key Points
- Aramco, the Saudi state oil giant, reported a 23% decrease in net profit for the third quarter of 2023, with earnings falling to $32.6 billion. The decline is attributed to lower crude oil prices and reduced sales volumes.
- Despite the drop in profitability, Aramco’s earnings exceeded analyst estimates, which were around $31.8 billion. Free cash flow for the company also saw a significant reduction, falling to $20.3 billion, less than half of the previous year’s $45 billion.
- Aramco maintained its dividend payout commitment of $29.4 billion to investors and the Saudi government, comprising a base dividend payout of $19.5 billion to be paid in the fourth quarter, along with a performance-linked dividend of $9.9 billion, which will be based on combined full-year 2022 and nine-month 2023 results. The company is continuing to explore opportunities for business expansion and meet customer needs.
The Saudi state oil giant, Aramco, reported a 23% decline in net profit for the third quarter, falling to $32.6 billion by the end of September. This drop is primarily attributed to reduced crude oil prices and volumes sold. However, despite the decrease, the company’s earnings surpassed analyst expectations, which were estimated around $31.8 billion. Free cash flow plummeted to $20.3 billion, showing a significant decrease from the previous year’s $45 billion. Aramco has upheld its dividend payout, allocating $29.4 billion to investors and the Saudi government. This dividend includes a base payout of $19.5 billion for the fourth quarter and an additional $9.9 billion based on combined 2022 and 2023 results.
The company saw an increase in capital expenditure, rising to $11.02 billion, marking expansions into liquefied natural gas (LNG) investments internationally and initiating plans to enter the South American market through downstream retail acquisition.
Similar to other energy majors, Aramco’s diminished profitability aligns with industry trends. Ongoing production cuts have been carried out by Saudi Arabia in line with OPEC policies, with plans to revisit the production strategy in December.
Aramco’s President and CEO, Amin Nasser, emphasized the company’s ability to consistently generate value for shareholders while expressing the company’s ongoing focus on customer needs and identifying new business opportunities. Aramco’s strong financial results have reinforced its capability to evolve its business and maintain shareholder value.
Moreover, Aramco has been recognized as one of the world’s largest companies by revenue, with Fortune magazine ranking it as the second-largest company by revenue globally, following Walmart and surpassing tech giants like Apple and Amazon. This ranking was achieved after Aramco recorded an annual profit in 2022 of over $160 billion, the highest profit ever reported by a publicly listed company, attributed to soaring oil prices due to geopolitical events like Russia’s invasion of Ukraine.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/07/oil-giant-saudi-aramcos-profit-slides-23percent-in-third-quarter-on-lower-crude-price-volumes.html
