Saudi Aramco reported its highest
quarterly earnings since listing its
shares in 2019, as the world’s biggest
oil exporter profited from resurgent
global demand.
Net income at the state-backed group
rose to $30.4bn in the third quarter
from $11.8bn a year earlier, driven by
rising prices, higher volumes sold and
stronger refining and chemicals margins,
the company said yesterday.
Analysts had forecast net income of
about $29.1bn, according to an average
compiled by the company.
Despite beating expectations, generating
free cash flow of $28.7bn and
calls from some analysts to increase
returns to shareholders, Saudi Aramco
maintained its dividend for the
quarter at $18.8bn, in line with its
guidance.
Amin Nasser, Saudi Aramco’s chief
executive, assigned the group’s strong
performance to “increased economic
activity in key markets and a rebound
in energy demand, as well as our
unique low-cost position”.
He said: “Some headwinds still exist
for the global economy, partly due to
supply chain bottlenecks, but we are
optimistic that energy demand will
remain healthy for the foresee able
future.”
The company’s annual dividend,
currently set at $75bn, is a vital source
of revenue for the Saudi Arabian government,
which still owns 98 per cent
of Saudi Aramco stock after it listed a
sliver of the shares in December 2019.
Saudi Aramco borrowed heavily to
maintain its dividend during the
slump in prices caused by the coronavirus
pandemic last year.
As a result, gearing, which the company
defines as a measure of the
degree to which operations are
financed by debt, surged from minus
4.9 per cent in the first quarter of
2020 to 23 per cent in December. It
stayed at that level in the first quarter
of this year.
The group reduced gearing to 19.4
per cent in the second quarter and cut
it again in the last three months to 17.2
per cent, a move it attributed primarily
to higher cash flows. Capital
expenditure this year was still forecast
at about $35bn, it said.
Saudi Aramco, like its international
rivals including Chevron, Exxon -
Mobil and BP, have all benefited from
the global economic recovery this
year, which has pushed oil prices
above $80 a barrel for the first time in
more than three years.
Prices have been further supported
by Saudi Arabia and its allies in the
Opec+ group carefully controlling the
return of production that they cut at
the start of the pandemic. The cartel
has agreed to increase output at a
level of 400,000 barrels a day every
month but resisted pressure from the
likes of US, Japan and India to move
faster.
Saudi Aramco said it had produced
about 9.5m b/d of crude in the past
three months, up from about 8.5m b/d
in the second quarter.