Aramco’s profit fell 25 percent last year, but the company continues to raise its dividend

Saudi state oil company Saudi Aramco’s net profit fell by nearly 25 percent last year to 121.3 billion dollars (2.8 trillion Kč). Even so, it was the company’s second-highest net profit on record, the company said in a report on its financial results on Sunday. The company paid out 97.8 billion dollars in dividends last year, 30 percent more than the previous year.

The fall in last year’s profit was mainly due to lower oil prices and a lower volume of crude sold. The country began diversifying its economy years ago, but the results so far and its approach to dividend policy show that the government remains heavily dependent on oil sales revenue, Reuters reported. Last year, oil sales accounted for 62 percent of the state’s total revenue.

The Saudi government, which directly owns 82.2 percent of the company’s shares, relies heavily on generous payments from the firm. These include royalties and taxes as well as dividends. Saudi Arabia is the world’s largest oil exporter and uses the revenue from its sales mainly to reshape its economy and secure more income from sources other than fossil fuels in the future. The country has relied on oil for nearly 90 years.

“Our balance sheet remains in excellent shape, even after the launch of a strong growth programme and dividend payments,” CEO Amin Nasser said.

He expects global oil demand to reach 104 million barrels per day this year, up from an average of 102.4 million barrels per day last year.

The government is seeking to implement its ambitious economic agenda, known as Vision 2030, through the Public Investment Fund (PIF). The fund owns a 16 percent stake in Aramco. Last week, the government transferred an eight percent stake to companies owned by the PIF.

Aramco increased its base dividend, which it pays regardless of its financial performance, by four percent year on year for the fourth quarter. It will pay out a total of 20.3 billion dollars in base dividends. Management expects to pay 43.1 billion dollars in performance-linked dividends this year, of which it plans to pay 10.8 billion USD in the first quarter. The planned performance-linked dividend represents an increase of about nine percent year on year.

The company’s shares were trading at around 31.80 riyals on the Riyadh stock exchange this morning, down 1.2 percent. They fell below 32 riyals, the price at which they were listed in 2019 in an initial public offering (IPO). Reuters reported last week, citing sources, that the government is preparing to sell more shares in the company.