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Saudi Aramco profits drop 73pc after oil price crash

Saudi Aramco -  Ahmed Jadallah/REUTERS
Saudi Aramco - Ahmed Jadallah/REUTERS

State-controlled oil giant Saudi Aramco said it would continue to pay $75bn (£58bn) in dividends to shareholders this year, despite profit slumping by more than two thirds in the second quarter.

Saudi Aramco, which is the world's largest oil exporter, said its profit was down at 24.6bn riyals (£5bn) in the three months to June 30, compared to 92.6bn riyals last year, after it took a hit from lower crude oil prices and also experienced "declining refining and chemicals margins".

Global economic shutdowns to curb the spread of Covid-19 have hammered all major oil companies in recent months, with travel having been severely limited.

Between January and April, brent crude prices dropped by more than 70pc, to around $20 a barrel, although have recovered slightly since following a deal by OPEC producers to cut supply.

Saudi Aramco president and chief executive Amin Nasser said the company had begun to see a "partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economy".

However, Saudi Aramco was still expecting to curb spend during the year, and said it expected its capital expenditure to be at the lower end of its $25bn to $30bn range.

Despite the company recording a steeper-than-expected drop in profits for the latest quarter, it said it had decided to stick to plans to pay $18.75bn in dividends for the second quarter, and $75bn for 2020 as a whole.

A large portion of that will go to the government in Riyadh, Saudi Aramco's main shareholder. It comes as Saudi Arabia faces a deep recession this year, with the Government having already introduced measures to pull back spending, such as removing a cost-of-living allowance for state employees. The International Monetary Fund is forecasting that the kingdom's deficit will exceed 12pc of annual gross domestic product this year.

Crown Prince Mohammed bin Salman has recently been looking to diversify the kingdom's revenues away from crude, although it is currently still heavily reliant on the industry, responsible for around two thirds of its revenue.