Saudi Aramco posted its highest profit since its record stock-market listing after oil prices surged in the wake of Russia’s invasion of Ukraine.
Aramco, which last week surpassed Apple Inc. to become the world’s most valuable company, followed Big Oil rivals such as Shell Plc and BP Plc in reporting bumper earnings for the first quarter.
Like them, the Saudi Arabian firm’s results were boosted by a crude jump to $110 a barrel after Moscow’s attack in late February.
State-controlled Aramco made a net income of $39.5 billion, up 82 per cent from a year earlier, when global energy demand was still severely suppressed by the coronavirus pandemic.
The company’s free cash flow rose almost to $31 billion, though it opted to keep its quarterly dividend unchanged at $18.8 billion. That enabled Aramco to reduce its leverage.
Gearing, a measure of debt to equity, fell from 14 per cent in December to 8 per cent at the end of March. The gauge spiked above 20 per cent during the pandemic as profit slumped, forcing Aramco to borrow more.
Later on Sunday, the finance ministry announced quarterly revenue growth of 36 per cent compared with the same period in 2021, yielding a surplus equivalent to more than $15 billion, state media reported.
Aramco is Saudi Arabia’s “crown jewel” and primary source of revenue.
The latest financial results were published four days after Aramco dethroned Apple as the world’s most valuable company, with shares worth $2.42 trillion compared to Apple’s $2.37 trillion.
Last year, ahead of the COP26 climate-change summit, Saudi Arabia pledged to achieve net-zero carbon emissions by 2060, sparking skepticism from the environmental campaign group Greenpeace.
The Aramco results reflect an ongoing momentum in the oil and gas industry, which has benefited from a more than 45% increase in prices since the start of the year. Earnings from Aramco’s global peers such as BP and Shell have hit their highest level in years, despite incurring write-downs for exiting operations in Russia following the invasion of Ukraine.
Aramco is rewarding investors as a result. The company said it would use 4 billion dollars in retained earnings to distribute bonus shares to shareholders — amounting to one share for every 10 shares held. It also kept its enormous dividend stable at 18.8 billion dollars, covered by a 68% year-on-year increase in free cash flow to 30.6 billion dollars.
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Saudi Arabia is the largest producer in the oil cartel Opec (Organization of the Petroleum Exporting Countries) and raising production could help to reduce energy prices.
Aramco itself also faces security challenges because of the conflict in Yemen, with Huthi rebels targeting some of its sites and temporarily knocking out a big portion of the kingdom’s crude production.
Its latest set of results come days after Aramco reclaimed the top spot as the world’s most valuable company from Apple for the first time in almost two years.