Saudi Aramco, the world’s most valuable oil company, reported Tuesday a more than 19% plunge in its net income to $31.9 billion (SAR 119.5 billion) for the first quarter of 2023, hit by lower crude oil prices.
The 19.2% year-on-year drop in net profit for the first three months of the year was somewhat countered by lower income tax and zakat and higher finance and other income, according to the company’s interim result for the period.
Aramco posted $39.5 billion (SAR 148 billion) in the first quarter of 2022 when the oil giant heavily benefited from soaring oil prices last year. However, the earnings smashed analysts’ estimates of $30.8 billion, Reuters reported, citing Refinitiv data.
Aramco’s first-quarter revenues touched $111.3 billion (SAR 417.5 billion), down 10.6% from $124.5 billion (SAR 467 billion) for the same period a year ago.
Its other income related to sales totaled $11.3 billion (SAR 42.4 billion) in the first quarter, which dropped by 15% from $13.3 billion (SAR 49.9 billion) in the first quarter of 2022.
Also in the first quarter, Aramco’s capital expenditures came in higher at $8.7 billion (SAR 32.8 billion) from $7.6 billion (SAR 28.4 billion), and external investments amounted to $2.6 billion (SAR 9.9 billion).
The higher spending was due to the oil firm's continuous investment in energy, projecting “oil and gas will continue to be an important part of the global energy mix for the foreseeable future.”
“Our growth strategy remains on track and we made significant progress on the strategic expansion of our Downstream business during the quarter, announcing a key acquisition in the US as well as important investments and partnerships in China and South Korea,” said Aramco President and CEO Amin H. Nasser.
In a separate regulatory filing early Tuesday, Aramco said it plans to introduce performance-linked dividends, which would be distributed quarterly and add to the company’s existing base dividend payout.
The new dividend mechanism would be “in the amount of 50%-70% of Saudi Aramco Group’s annual free cash flow, net of the base dividend and other amounts including external investments, to be determined with the annual results,” the filing noted.
Aramco paid dividends of $19.5 billion for the fourth quarter of 2022. Dividends payout of the same amount for the first quarter of 2023 will be distributed in the second quarter.
