Aramco sees mixed 1Q results as performance dividend plunges

Saudi Aramco reported a 4.6% y-o-y drop in net income to SAR 97.54 bn (USD 26 bn) in 1Q 2024, according to both an earnings release (pdf) and Tadawul disclosure.

Better than expected: The result, weighed down by weaker oil prices amid global economic uncertainty, still exceeded analyst estimates by some SAR 3.4 bn, according to Asharq Business. Armaco’s net income also outperformed other rivals like BP (-50% y-o-y) and Shell (-28% y-o-y), according to the Financial Times.

Revenue missed the mark: Revenue inched up 0.9% y-o-y to SAR 405.7 bn (USD 108.2 bn), supported by higher volumes of gas, refined and chemical products, and traded crude oil, though lower prices weighed on performance. However, revenue came in slightly below expectations of SAR 409.74 bn for the quarter.

The first taste of the new dividend policy: Aramco’s board approved a SAR 80.1 bn (USD 21.4 bn) dividend for 1Q 2025, at SAR 0.3312 per share. This includes a base dividend of SAR 79.3 bn (USD 21.1 bn) at SAR 0.3278 per share and a performance-linked dividend of SAR 0.82 bn (USD 0.22 bn) at SAR 0.0034 per share. The payout will be distributed on 29 May.

REMEMBER- Aramco slashed its total 2025 dividend policy by about a third to USD 85.4 bn down from USD 124.2 bn, citing financial pressures from high payouts and lower oil prices.

Dividends breakup: Total dividend payout dropped 31.1% from USD 31 bn a year earlier due to the reduced performance component. The sharp 98% y-o-y drop in the performance-linked dividend reflects tighter free cash flow — down 15.8% y-o-y to USD 19.2 bn — as lower oil prices and rising costs weighed on Aramco’s financial flexibility, Reuters reports. Meanwhile, the base dividend saw a modest 4.2% y-o-y uptick, according to CNBC.

What the pundits said: “The sharp fall in the oil price makes the financing outlook for both the fiscal shortfall and Vision 2030 significantly more challenging,” Malik told Reuters. She added that weaker Aramco profits were already reflected in a wider budget deficit for the first quarter.

Tariffs and Opec hikes haven’t hit the numbers yet: The impact of Trump's April tariffs and Opec+’s decision to boost oil output by 411k barrels per day were not reflected in Aramco's first-quarter results. With April’s oil prices sliding to their lowest level in four years at USD 60 a barrel, both Aramco and the government are likely to face further challenges, despite the increase in production.

Market reax: Aramco’s shares inched up 0.64% to SAR 25, despite a 10.9% decline year-to-date.

Steady as she goes: CEO Amin Nasser described Aramco’s financial performance as “robust,” crediting the company’s operational resilience and low-cost advantage amid global economic uncertainty and softer oil prices. He reaffirmed Aramco’s long-term growth strategy across upstream, downstream, and new energy sectors, including gas, hydrogen, and carbon capture.

Looking ahead: Aramco has capital investments of USD 52-58 bn slated for 2025, with Nasser expecting the launch of the Jafurah gas field to take place later in the year, along with expanding LNG and petrochemical projects.

Aramco expects global oil demand to surpass last year’s “historic” levels, AsharqBusiness quotes CFO Ziad Al Murshed as saying. Aramco has 3 mn barrels per day of spare capacity in its back pocket — with each mn capable of adding SAR 43 bn to annual income, Al Murshed told Al Ekhbariya.