Saudi Aramco (2222.SR) saw profits collapse by 73.4% in the second quarter (Q2) of the year, reflecting a devastating year for oil markets and the global energy economy at large.
Sales at the world’s biggest oil company were hit by a decline in energy demand and a slump in oil prices.
Aramco, Saudi Arabia’s majority-state owned company and the world’s largest crude producer said that it expected capital expenditure to be at the lower end of $20bn (£15.3bn) to $30bn range.
The results are in line with major oil companies, as lockdowns to limit coronavirus spread reduced travel — causing a reduction in oil consumption and sent prices tumbling to decades low levels.
Despite the loss, the oil producer said that it plans to stick to its $75bn dividend pledge to its shareholders this year, paying out $18.75bn per quarter.
The coronavirus pandemic-induced, global slowdown in oil demand, pushed Aramco’s net income for Q2 down to $6.57bn, from $24.7bn in the same period last year and $16.6bn in the first quarter of 2020.
In the company’s first earnings press conference, Aramco president and chief executive, Amin Nasser blamed “strong headwinds from reduced demand and lower oil prices” for the financial results.
The result for Q2 reflects the biggest shock for global energy markets, which saw oil demand fall to 25-year lows and market prices plunge by three-quarters.
The oil giant became the world’s most valuable company after it listed on the Saudi stock exchange in 2019 — but its since got toppled by US tech company Apple (AAPL) after COVID-19 took its toll on the oil industry.
Aramco’s dividends play a critical role in helping Saudi Arabia’s government manage its fiscal deficit.
Earlier this month, BP (BP.L) cut its dividend for the first time in a decade after a record $6.7bn Q2 loss — while in April, Royal Dutch Shell (RDSB.L) cut its dividend for the first time since the Second World War.