Saudi Arabian state oil giant Aramco on Tuesday reported a 25 per cent fall in first-quarter net profit, below analyst estimates, hurt by lower crude oil prices as the coronavirus slashed demand.
Brent crude prices fell 65pc in the first quarter, before Opec+ producers agreed to cut oil supply by a record 9.7 million barrel per day starting from May to help shore up prices and curb oversupply.
Net profit fell to 62.48 billion riyals ($16.64 billion) after zakat and tax for the quarter to March 31 from 83.29 billion a year earlier.
Analysts had expected a profit of $17.8 billion, 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 chemicals margins and inventory re-measurement losses".
“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 has kept its oil output at around 9.7 million barrels per day during the first three months of the year under an Opec+ supply cut pact, 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 $13.4 billion were paid in the first quarter, in respect of the fourth quarter of 2019. Dividends of $18.75 billion will be paid in the second quarter.
Aramco’s cash flows from operating activities, stood at $22.4 billion in the first quarter, compared to $24.5 billion in the same period of 2019, the company said.
The national oil giant plans to acquire a stake in Saudi petrochemical maker SabicC for around $70 billion, though sources told Reuters 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 that its planned acquisition of a 70pc equity stake in petrochemical maker Sabic is on track to close in the second quarter.