Saudi Aramco has reported a 25 per cent fall in first-quarter earnings, due to the oil price collapse and lack of demand stemming from the coronavirus pandemic.
The state energy company reported net income of $16.7bn (£13.5bn, €15.4bn) in the first three months of the year, compared to $22.2bn a year earlier, as lockdowns reduced global demand by a third from pre-crisis levels.
Saudi Arabia has introduced austerity measures to conserve cash, from cutting capital spending to increasing value added tax by a third and cancelling cost-of-living allowances for state employees.
“The Covid-19 crisis is unlike anything the world has experienced in recent history,” said Amin Nasser, Saudi Aramco’s chief executive, adding that the pandemic’s impact on global energy demand and oil prices would continue to impact earnings.
The company, which has promised shareholders $75bn in dividends this year, said it would pay $18.8bn for the first quarter. As this figure is more than its free cash flow of $15bn for the period, the company may have to borrow to cover the payout.
In March the company said it had been issued a government directive to expand production to record levels and boost capacity to 13m b/d from 12m b/d. It was later asked to cut production to 7.5m b/d from June, the lowest figure in 18 years.
Since listing its shares in a $29.4bn offering on Riyadh’s Tadawul exchange in December that valued Saudi Aramco at $1.7tn, shares in the company have fallen below their flotation price.
The company said in March that it would also cut capital spending to as low as $25bn this year, from $33bn in 2019.
Total revenues including income related to sales were at $51.4bn in the first quarter of 2020, down from $63.2bn a year earlier.