Saudi Aramco’s profit tanks 73% in the fiscal second quarter

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on Aug 10, 2020
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  • Saudi Aramco’s profit tanks 73% in the fiscal second quarter.
  • The oil company to pay £57.47 billion in dividend this year.
  • Aramco reports £4.67 billion of free cash flow in the fiscal Q2.

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Saudi Aramco (Tadawul: 2222) said on Monday that its profit in the fiscal second quarter came in 73% lower. The company attributed the decline to the Coronavirus pandemic that weighed heavily on demand and fuelled a sharp plunge in oil prices in recent months.

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Shares of the company remained flat on average in premarket trading on Monday. The price action wasn’t interesting on market open either. Saudi Aramco is currently trading at £6.77 per share. It had dropped to as low as £5.17 per share in March as COVID-19 wreaked havoc on the global energy market. At the time of writing, the Saudi oil firm has a market capitalisation of £1.4 trillion and a price to earnings ratio of 21.28.

Saudi Aramco to pay £57.47 billion in dividend this year

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CEO Amin Nasser of the world’s largest oil exporter expressed confidence on Monday that signs of recovery were now evident in oil demand. Saudi Aramco reaffirmed its plans of making dividend payments worth £57.47 billion this year. For the second quarter, it will pay £14.37 billion in dividend.

The Saudi oil giant’s profit in Q2 also fell shy of the experts’ forecast. Aramco said on Monday that its 2020 capital expenditures are likely to register close to £19.16 billion. Saudi Aramco was the world’s largest company in terms of market capitalisation until mid-July. Late last month, however, Apple Inc. topped Aramco to become the world’s most valued company.

In terms of net profit in the three months that concluded on 30th June, the company recorded a decline to £5.03 billion from £18.93 billion in the same quarter last year. Analysts, on the other hand, had anticipated £6.40 billion of net profit for Aramco in Q2.

Aramco reports £4.67 billion of free cash flow in Q2

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Earlier this month, its peer, British Petroleum, announced to have concluded the second quarter in loss that pushed it into slashing it dividend for the 1st time in almost ten years.

Aramco valued its free cash flow in the recent quarter at £4.67 billion and £16.17 billion for the first and second quarters combined. In comparison, its free cash flow was noted at £15.79 billion in the comparable quarter of last year and £29.12 billion in the first six months of 2019.

As of June end, Aramco said its gearing ratio stood at 20.1% attributed to its Saudi Basic Industries Corp (SABIC) acquisition.

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