Saudi Aramco, the state oil giant, has recently released its financial results for the third quarter of 2023. The company reported a 23% decrease in net profit, with earnings dropping down to $32.6 billion. This decline is largely attributed to the impact of lower crude oil prices and volumes sold.
Despite the decrease, Aramco’s net profit still managed to exceed analyst estimates, which were around $31.8 billion. However, this decline in profit is a matter of concern for the company, as it also led to a significant reduction in free cash flow. Aramco’s free cash flow for the third quarter was recorded at $20.3 billion, in comparison to $45 billion during the same period last year.
In order to mitigate the effects of declining profits, Aramco has decided to maintain its dividend payout of $29.4 billion to investors and the Saudi government. This payout includes a base amount of $19.5 billion, which will be paid in the fourth quarter, along with a performance-linked dividend of $9.9 billion.
The $9.9 billion performance-linked dividend will be paid out in the fourth quarter, based on the company’s full-year 2022 and nine-month 2023 results. This move aims to ensure that investors and stakeholders remain confident and satisfied with Aramco’s performance despite the challenging economic environment.
Furthermore, Aramco’s capital expenditure has witnessed an increase, reaching $11.02 billion for the third quarter. This marks a significant rise from the $9.03 billion spent during the same period last year. The company’s expansion plans include finalizing an agreement on its first-ever international liquefied natural gas (LNG) investment, as well as entering the South American market through a downstream retail acquisition.
Overall, despite the drop in net profit and free cash flow, Aramco remains committed to providing consistent dividends to its investors and shareholders. The company’s expansion plans indicate a strategic effort to diversify its portfolio and explore new opportunities in the international market. As the world grapples with fluctuating oil prices and global uncertainties, Aramco’s ability to navigate these challenges will be crucial for its future success.