Aramco’s 2019 profit falls 21% due to drop in oil prices

Oil giant Saudi Aramco reported a 21 percent decline in 2019 net profit due to a drop in oil prices and production, and said it plans to “rationalize” capital spending in the wake of the coronavirus outbreak.

This was Aramco’s first earnings announcement after it listed in December in a record $29.4 billion initial public offering (IPO) that valued the company at $1.7 trillion.

Its shares fell below the IPO price last week for the first time, as oil prices crashed after the collapse of an output deal between OPEC and non-OPEC members which led to an oil price war between Riyadh and Moscow..

Aramco CEO Amin Nasser said in a statement the oil giant has taken steps to rationalize planned capital spending in 2020 following the coronavirus outbreak.

“The company expects capital spending for 2020 to be between $25 billion and $30 billion in light of current market conditions and recent commodity price volatility. Capital expenditure for 2021 and beyond is currently under review,” Aramco said in a statement.

Brent crude futures last traded at $33.85 per barrel on Friday, down from about $64 when Aramco listed its shares.

Despite a drop in income, Aramco said it paid a dividend of $73.2 billion in 2019 and intends to declare a cash dividend of $75 billion in 2020, paid quarterly.

Aramco, which is 98% owned by the Gulf kingdom, reported a net profit of $88.2 billion in 2019, down from $111.1 in 2018. Analysts had expected Aramco to post a net profit of 346.6 billion riyals ($92.6 billion) in 2019, according to an estimate of 15 analysts polled by Refinitiv.