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Saudi Aramco’s first-quarter profit slides 25% as the collapse in oil prices bites

Saudi Aramco reported a 25% fall in net income for the first quarter on Tuesday, as the state-owned oil giant battles with a dramatic slide in crude prices and cratering global demand.

In a release published Tuesday, the company said net income slid to 62.5 billion riyals ($16.6 billion) in the first three months of the year, down from 83.3 billion riyals over the same period in 2019. This was “primarily reflecting lower crude oil prices, as well as declining refining and chemicals margins and inventory re-measurement losses,” the company said in a statement.

Aramco said it would pay a dividend of $18.75 billion in the first quarter, despite the fall in profit. The company had pledged to issue a $75 billion dividend annually for five years as part of its pitch to investors before going public, and it does not appear to be rolling that back yet despite cuts to capital spending. The company said free cash flow in the first quarter was 56.3 billion riyals, down from 65.1 billion riyals over the same period last year.

Aramco launched its initial public offering, the largest in history, in December, temporarily peaking at a market cap of $2 trillion on its second day of trading. But it might as well have been a different world — oil prices at that time were trading at more than $64 a barrel.

While the massive valuation was seen as a win for the Saudi Crown Prince Mohammed bin Salman, who spearheaded the IPO, it lacked the international interest the kingdom had hoped for, relying instead on local investors after the company canceled overseas roadshows in London and New York. The local listing on the Saudi Tadawul comprised 1.5% of the company.

Saudi Aramco’s first-quarter profit slides 25% as the collapse in oil prices bites, CNBC, May 12

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