Saudi Aramco maintains quarterly dividend at $31bn despite 15% drop in Q3 profit

Largest oil exporter maintained 'strong' free cash flow despite a lower oil price environment

Saudi Aramco says it has made progress with its upstream developments and advanced its new energies programme. Reuters

Saudi Aramco, the world's top oil-exporting company, reported a more than 15 per cent decline in its third-quarter profit, amid a challenging oil market marked by low prices, but still maintained a substantial 116.4 billion Saudi riyals ($31 billion) dividend.

Net profit in the three months through September dropped to 103.37 billion riyals, "mainly due to the impact of lower crude oil prices and weakening refining margins", the Dhahran-based company said on Tuesday.

This was partially offset by a reduction in selling, administrative and general expenses "primarily driven by a gain from derivative instruments and a decrease in production royalties largely reflecting lower crude oil prices and a lower average effective royalty rate", compared with the same quarter in 2023, Aramco said.

But the company retained a base dividend of 76.1 billion riyals and a performance-linked dividend of 40.4 billion riyals for distribution in the fourth quarter.

Earnings before interest and taxes were down 17.3 per cent to about 193 billion riyals.

“Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment," said Amin Nasser, president and chief executive of Saudi Aramco.

"We also progressed our upstream developments, strengthened our downstream value chain and advanced our new energies programme as we continue to invest through cycles."

The oil market has faced volatility in the past year amid escalating tensions in the Middle East, with Israel launching attacks on Gaza, Lebanon and Iran, which have cast uncertainty over supply. Concerns about a dip in demand, mainly in China, have weighed on the market. Oil consumption in China, the world's second-biggest consumer of crude, has slowed in recent months, which analysts attribute to a slowing economy and a long-term shift towards the use of electric vehicles.

Brent, the benchmark for two thirds of the world's oil, and West Texas Intermediate, the gauge that tracks US crude, were virtually flat at $75.26 and $71.65, respectively, at 1.25pm (UAE time) on Monday.

Brent and WTI are down 2.43 per cent and 0.1 per cent, respectively, so far in 2024, and have slid 15 per cent and 17 per cent since the Israel-Gaza war began in October last year.

Aramco has continued to strengthen its portfolio and finances. In October, it announced the completion of a $3 billion international sukuk issuance, comprising two US dollar-denominated tranches.

The sukuk "highlighted strong investor confidence in Aramco and we can be proud of the significant strides the company continues to make, all while sustaining our high levels of profitability, operational performance and reliability", Mr Nasser said.

In July, the company raised $6 billion through its first bond issuance in three years, in a deal that attracted orders worth $33 billion as corporate, sovereign and quasi-sovereign issuers in the Gulf continue to increasingly tap bond markets to extend maturities, pay existing debts and raise finances for funding new projects.

“As we focus on strategic growth opportunities and capturing value through integration and diversification, we intend to maintain our positive momentum and cement our position as a leading global energy and petrochemicals player," Mr Nasser said.