Aramco Q1 earnings: Saudi oil major to distribute $31 billion in dividends despite 14% fall in net income
Saudi Aramco, the state-owned oil behemoth, has announced plans to pay out $31 billion in dividends to its shareholders, including the Saudi government, despite experiencing a decline in earnings for the first quarter due to reduced oil prices and sales volumes.
Earnings dip amid global oil dynamics
In the first quarter ending March 31, Aramco reported a net income of $27.3 billion, marking a 14% decrease from the $31.9 billion recorded during the same period last year.
This figure aligns with analyst predictions according to the company’s earnings statement.
The drop in earnings reflects broader market challenges, including fluctuating oil prices and OPEC+ output cuts.
Dividend strategy amid fiscal adjustments
Despite the downturn, Aramco remains committed to its substantial dividend payments, declaring $20.3 billion in base dividends for the first quarter and an additional $10.8 billion in performance-linked dividends scheduled for distribution in the second quarter.
Overall, the company anticipates declaring total dividends of $124.3 billion for 2024, of which $43.1 billion will be performance-linked.
Saudi economic diversification and fiscal needs
The dividends are crucial for the Saudi government, which holds approximately 82.2% of Aramco and relies significantly on the company’s payouts, including royalties and taxes, to fund its ambitious economic diversification efforts away from oil.
These initiatives are part of the kingdom’s broader strategy to reduce its economic dependence on crude oil exports.
Budget pressures and economic forecasts
The current global oil market poses additional challenges for Saudi Arabia, the world’s leading oil exporter.
With Brent crude averaging around $83.50 so far in 2024 and the International Monetary Fund (IMF) forecasting that Saudi Arabia needs oil prices at $96.2 per barrel to balance its budget, the kingdom faces a projected budget deficit of 79 billion riyals ($21.07 billion) this year.
This financial pressure could lead to delays in several of the kingdom’s mega projects as it navigates these fiscal constraints.
The strategic management of its oil revenues and the successful implementation of economic reforms are critical as Saudi Arabia continues to adapt to the evolving global energy landscape and its own transformative economic agendas.
The post Aramco Q1 earnings: Saudi oil major to distribute $31 billion in dividends despite 14% fall in net income appeared first on Invezz
