Saudi Aramco, the world’s largest oil producer, announced a 15.4% decline in its third-quarter net profit, driven by lower crude oil prices and weakening refining margins. Despite the profit drop, the company maintained its dividend payout at $31.05 billion.
Key Financials
- Net Income: Aramco reported $27.56 billion in net income for the third quarter, surpassing its estimate of $26.9 billion. This figure represents a 5% decrease from the previous quarter’s $29.1 billion.
- Dividend: The company confirmed a dividend of $31.05 billion, comprising a base payout of $20.3 billion and a performance-linked payout of $10.8 billion.
- EBIT: Earnings before interest and taxes fell 17% year-on-year to $51.45 billion.
- Capital Expenditure: Aramco increased its capital expenditure guidance by 20% to $13.23 billion.
Market Conditions
The decline in profits aligns with broader trends among oil majors, as global oil prices and refining margins have dipped. The average selling price of oil dropped from $85 per barrel in Q2 to $78.7 per barrel in Q3. Non-OPEC supply growth and prolonged OPEC+ production cuts have further pressured crude prices.
Strategic Insights
CEO Amin Nasser highlighted the company’s resilience, stating, “Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment.” The firm continues to advance its upstream developments and downstream value chain while investing in new energy initiatives.
Economic Impact
The revenues from Aramco’s performance are crucial for Saudi Arabia’s economy, currently undergoing diversification under the Vision 2030 plan. This comes as the Saudi government has adjusted its growth forecast for 2024 to 0.8%, down from an earlier projection of 4.4%.
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