{"id":94975,"date":"2025-03-05T00:00:00","date_gmt":"2025-03-05T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2025\/03\/05\/aramco-cuts-dividends-as-net-income-falls\/"},"modified":"2025-03-05T00:00:00","modified_gmt":"2025-03-05T00:00:00","slug":"aramco-cuts-dividends-as-net-income-falls","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2025\/03\/05\/aramco-cuts-dividends-as-net-income-falls\/","title":{"rendered":"Aramco cuts dividends as net income falls"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>Saudi Aramco cut its 4Q 2024 dividend to USD 21.36 bn (SAR 80.1 bn), down 31% y-o-y<\/strong> and a far cry from the expectation to  <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/edition\/am\/7f68fdd0-0fb4-41e5-8f0d-8ee87c9f4f10\/inflation-at-1.9%2525-y-o-y-in-4q-2024--sama\" style=\"\" rel=\"noopener\">maintain its payout<\/a>  of USD 31.1 bn (SAR 116.5 bn), according to <a target=\"_blank\" href=\"https:\/\/www.saudiexchange.sa\/wps\/portal\/saudiexchange\/newsandreports\/issuer-news\/issuer-announcements\/issuer-announcements-details\/?anId=85573&anCat=1&cs=2222&locale=en\" style=\"\" rel=\"noopener\">disclosure to Tadawul<\/a>. The decision to reduce its dividends \u2014 which analysts had expected would remain stable at USD 31.1 bn (SAR 116.5 bn) \u2014 comes as the oil giant reported a declining bottom line during the year. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The dividend breakdown:<\/strong> The 4Q 2024 dividend payout includes a USD 21.14 bn (SAR 79.28 bn) base dividend, up 4.2% y-o-y, and a performance-linked dividend of USD 0.22 bn (SAR 0.82 bn), slashed 98% y-o-y. The distribution date is set for 26 March. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Aramco also plans to reduce its 2025 dividend to USD 85.4 bn from USD 124.2 bn in 2024<\/strong>, it said in its <a target=\"_blank\" href=\"https:\/\/www.aramco.com\/-\/media\/publications\/corporate-reports\/reports-and-presentations\/2024\/fy\/saudi-aramco-fy-2024-results-press-release-english.pdf\" style=\"\" rel=\"noopener\">earnings release<\/a>, citing financial pressure from high payouts and subdued oil prices, which have strained its balance sheet and contributed to its net-debt position. The dividend will include a base payment and a smaller performance-linked portion, <a target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-03-04\/aramco-cuts-world-s-biggest-dividend-in-blow-to-saudi-budget\" style=\"\" rel=\"noopener\">Bloomberg<\/a> reports. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A new payout mechanism: <\/strong>Beginning in 2025, Aramco's performance dividend will be based on remaining freecash flow after core distributions and investments, with the final amount determined after the year's books are closed, according to <a target=\"_blank\" href=\"https:\/\/asharqbusiness.com\/financial-reports\/72656\/%D9%86%D8%AA%D8%A7%D8%A6%D8%AC-%D8%A3%D8%B9%D9%85%D8%A7%D9%84-%D8%B4%D8%B1%D9%83%D8%A9-%D8%A3%D8%B1%D8%A7%D9%85%D9%83%D9%88-%D8%A7%D9%84%D8%B3%D8%B9%D9%88%D8%AF%D9%8A%D8%A9-%D8%AE%D9%84%D8%A7%D9%84-%D8%B9%D8%A7%D9%85-2024\/\" style=\"\" rel=\"noopener\">Asharq Business<\/a>. Previously, performance-related dividends announced in 2Q 2023 ranged from 50-70% of annual freecash flow, after deducting basic distributions and expenses like investments. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">THE FINANCIALS-<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Aramco\u2019s net in<\/strong><strong>come fell 12.4% y-o-y in 2024 to USD 106.25 bn (SAR 398.42 bn), <\/strong>according to its earnings release. Meanwhile, revenues dipped 0.97% y-o-y to USD 436.61 bn (SAR 1.64 tn). Including other income related to sales, total revenue stood at USD 480.45 bn (SAR 1.8 tn), down 2.9% y-o-y. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>What weighed on performance: <\/strong>Aramco\u2019s net income decline was driven by lower revenue, reduced finance income, and a 3.9% rise in operating costs attributed to higher purchases, production, administrative expenses, and impairment charges, despite lower production royalties, it said in its <a target=\"_blank\" href=\"https:\/\/www.aramco.com\/-\/media\/publications\/corporate-reports\/annual-reports\/saudi-aramco-ara-2024-english.pdf\" style=\"\" rel=\"noopener\">annual report (pdf)<\/a>. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Its realized oil price fell to USD 80.2 \/ bbl from USD 83.6 in 2023<\/strong>, as rising global production and slowing demand, along with lower crude oil prices, sales volumes, and weaker refined and chemical product prices, further pressured performance, according to <a target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2025\/03\/04\/saudi-oil-giant-aramco-posts-drop-in-full-year-profit-slashes-dividend.html\" style=\"\" rel=\"noopener\">CNBC<\/a>. Increased volumes of refined and chemical products partially offset these impacts, while economic uncertainty in 2024 weighed on hydrocarbon prices and refining and chemical margins. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>In 4Q 2024 Aramco\u2019s net income fell 19% y-o-y to USD 22.34 bn<\/strong>, according to <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/energy\/aramco-expects-sharp-drop-2025-dividends-2024-profit-falls-2025-03-04\/\" style=\"\" rel=\"noopener\">Reuters<\/a> calculations. Its average realized oil price fell nearly 15% y-o-y to USD 73.1 during the quarter. Aramco\u2019s results aligned with analysts' expectations despite incurring approximately USD 6.5 bn in noncash charges during 2024, according to <a target=\"_blank\" href=\"https:\/\/asharqbusiness.com\/financial-markets\/72576\/%D9%85%D8%A7%D8%B0%D8%A7-%D9%86%D8%AA%D8%B1%D9%82%D8%A8-%D9%81%D9%8A-%D8%B3%D9%88%D9%82-%D8%A7%D9%84%D8%A3%D8%B3%D9%87%D9%85-%D8%A7%D9%84%D8%B3%D8%B9%D9%88%D8%AF%D9%8A%D8%A9-%D8%A7%D9%84%D9%8A%D9%88%D9%85-4-%D9%85%D8%A7%D8%B1%D8%B3-2025\/\" style=\"\" rel=\"noopener\">Asharq Business<\/a>. Analysts polled by Argaam forecasted a 15.4% y-o-y decline in 4Q 2024 revenue to SAR 388.5 bn, while Asharq estimated quarterly net income at SAR 89 bn, down 13.5% y-o-y. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Despite the drop, Aramco is doing better than most: <\/strong>Aramco posted the strongest revenue performance among major oil giants and the second-highest net income, with earnings 1.3 times greater than the combined net income of the five largest competitors, according to <a target=\"_blank\" href=\"https:\/\/www.aleqt.com\/2025\/03\/04\/article_2757982.html\" style=\"\" rel=\"noopener\">Aleqtisadiah<\/a>. Its 1% revenue drop was the smallest among major energy firms, while its net income \u2014 despite falling 12.4% \u2014 accounted for 56% of the top six energy companies' combined earnings. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>DATA POINT-<\/strong><strong> Aramco's total borrowings increased to USD 319.3 bn in 2024 <\/strong>from USD 290.1 bn in 2023, while its net debt decreased from USD 102.8 bn to USD 78 bn. Cash flow from operating activities fell to USD 135.7 bn, down from USD 143.4 bn, and free cash flow declined to USD 85.3 bn from USD 101.2 bn. The company\u2019s gearing ratio rose to 4.5% from -6.3% a year earlier.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Highlights of 2024: <\/strong>Aramco\u2019s subsidiary Sabic transferred its <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/story\/6b0f8861-0e6d-4b21-991f-9ccd21f90b22\/pif-is-one-step-closer-to-becoming%253cmark%253e-hadeed%253c%2Fmark%253e%25e2%2580%2599s-new-owner\" style=\"\" rel=\"noopener\">Hadeed ownership<\/a> to PIF, receiving SAR 1.2 bn in cash and SAR 4.8 bn in deferred consideration. Aramco acquired a <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/story\/a98144c8-7b43-48fc-b6b9-945284fe8123\" style=\"\" rel=\"noopener\">100% stake<\/a> in Esmax for SAR 1.4 bn and phased a <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/story\/a828d42c-c5cb-47af-8284-a80c347a43e1\/goodbye,-neymar\" style=\"\" rel=\"noopener\">SAR 5.6 bn loan waiver<\/a> with Sumitomo for Petro Rabigh. In March, the government transferred 8% of Aramco\u2019s shares to PIF affiliates. In June Aramco took <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/story\/11b8a541-a6d0-44d9-a177-9ef29b4f41c8\/%253cmark%253earamco%253c%2Fmark%253e-completes-secondary-share-offering\" style=\"\" rel=\"noopener\">EMEA\u2019s largest secondary offering<\/a> since 2002 to market, raising USD 11.1 bn. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">DIVIDEND IMPACT-<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The reduction in Aramco's dividend is expected to widen Saudi Arabia\u2019s budget deficit to<\/strong><strong> 4% of GDP<\/strong> from 2.8% in 2024, with reduced government spending expected in 4Q, <a target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/energy\/aramco-expects-sharp-drop-2025-dividends-2024-profit-falls-2025-03-04\/\" style=\"\" rel=\"noopener\">Reuters<\/a> quotes Abu Dhabi Commercial Bank chief economist Monica Malik as saying. The record payouts in 2024 were crucial for addressing last year\u2019s shortfall and rising debt, Malik said. The deficit is already under pressure from low oil prices and rising costs for Vision 2030 projects like NEOM city and the 2034 FIFA World Cup, <a target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2025\/03\/04\/saudi-oil-giant-aramco-posts-drop-in-full-year-profit-slashes-dividend.html\" style=\"\" rel=\"noopener\">CNBC<\/a> reports. The government, which holds 81.5% of Aramco, and the PIF (holding 16%) benefit from these payouts, which also support government debt issuance. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Market reax:<\/strong> Saudi Aramco\u2019s shares dropped 2% to SAR 26.85, their lowest since August 2024, <a target=\"_blank\" href=\"https:\/\/www.argaam.com\/en\/under-spot-report\/47497?preview=true\" style=\"\" rel=\"noopener\">Argaam<\/a> reports. Aramco\u2019s market value stands at USD 1.74 tn, making it the world\u2019s sixth-most valuable company, behind Apple, Microsoft, NVIDIA, Amazon, and Google parent company Alphabet. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">THE YEAR AHEAD-<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Aramco is well-positioned to meet expected demand growth in 2025<\/strong>, with 3 mn barrels of spare capacity available, <a target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/0d24dcf4-b53b-48e5-b49c-99606958a96d\" style=\"\" rel=\"noopener\">Financial Times<\/a> quotes Aramco CEO Amin Nasser as saying. \u201cIf called upon, utilizing 1 mn barrels per day of spare capacity could generate an additional USD 12 bn in operating cashflow based on 2024's average price,\u201d Nasser said. Global oil demand is expected to hit a record in 2024, driven by increased consumption in China and India, with a 1.3 mn bbl \/ d rise, according to <a target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-03-04\/aramco-ceo-sees-strong-oil-demand-amid-opec-output-revival\" style=\"\" rel=\"noopener\">Bloomberg<\/a>. Nasser expressed confidence that OPEC+\u2019s decision to increase production will benefit Aramco. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Aramco has c<\/strong><strong>apital investmen<\/strong><strong>ts of USD 52-58 bn slated for 2025<\/strong>, excluding some USD 4 bn in project financing. In 2024, total capital investments amounted to USD 53.3 bn, including USD 50.4 bn in organic capital expenditures. The company expects to generate additional operating cashflows of USD 9-10 bn from its upstream gas business and USD 8-10 bn from its downstream segment by 2030. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Upcoming projects this year: <\/strong>Nasser expects to launch the Jafurah gas field later in the year. Aramco is focused on expanding LNG and petrochemical projects for growth, according to <a target=\"_blank\" href=\"https:\/\/www.alarabiya.net\/aswaq\/companies\/2025\/03\/04\/%D8%B1%D8%A6%D9%8A%D8%B3-%D8%A3%D8%B1%D8%A7%D9%85%D9%83%D9%88-%D9%8A%D8%AA%D9%88%D9%82%D8%B9-%D8%B2%D9%8A%D8%A7%D8%AF%D8%A9-%D9%86%D9%85%D9%88-%D8%A7%D9%84%D8%B7%D9%84%D8%A8-%D8%A7%D9%84%D8%B9%D8%A7%D9%84%D9%85%D9%8A-%D8%B9%D9%84%D9%89-%D8%A7%D9%84%D9%86%D9%81%D8%B7-%D9%81%D9%8A-2025\" style=\"\" rel=\"noopener\">Al Arabiya<\/a>. The company is pursuing LNG offtake agreements and exploring liquid-to-chemicals projects but has removed a proposed plant at Ras Al Khair from its plans. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Aramco is scaling up the use of AI across its operations, <\/strong>with Nasser noting the positive impact of DeepSeek, a Chinese AI company, on efficiency and resource use within Aramco, according to the Financial Times. The technology has been installed in Aramco\u2019s data center. Among Aramco\u2019s other AI investments is a <a target=\"_blank\" href=\"https:\/\/enterprise.news\/ksa\/en\/news\/story\/3243ca23-ac50-48af-b853-8f35f345cd56\/\" style=\"\" rel=\"noopener\">USD 1.5 bn partnership with US firm Groq<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Operating costs, lower oil prices, and slowing demand drive Aramco\u2019s performance drop<\/p>\n","protected":false},"author":1,"featured_media":94976,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2607],"tags":[139,285,10,87],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-94975","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-watch","tag-aramco","tag-earnings-watch","tag-enterpriseam-ksa","tag-oil-and-gas","wpautop","entry"],"acf":{"mongo_id":"a26a20ca-31ef-4909-94c2-ed5567aa7f53","order":"3","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/8\/1862.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Aramco's 2024 net income falls 12.4% as dividend slashed for 2025","related_issue":[94970],"teaser":"Operating costs, lower oil prices, and slowing demand drive Aramco\u2019s performance drop","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/3\/.efc459ab-c9d5-4583-98c7-ecb7bde25aaa.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - 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