By
Bhushan Akolkar
August 7th, 2023
Oil giant Saudi Aramco shares climbed 3.2% on Tuesday after the company posted a net income of $31.9 billion for Q1 2023.
Saudi Aramco recently posted its Q1 2023 earnings report, which showed a 19% decline in profit. The Middle Eastern oil giant realized a net income haul of $31.9 billion compared to $39.5 billion the previous year.
In March, Aramco reported a record net income of $161 billion for 2022, representing a 46.5% increase from 2021. At the time, company executives described the record profit as the “highest net income ever recorded in the corporate world”. Regardless, the Saudi Arabian Oil Group’s latest net income still beat analysts’ expectations of $30.5 billion for the quarter.
Analysts expected a dip in Saudi Aramco Q1 2023 net profit due to macroeconomic headwinds such as inflation and rising interest rates. Furthermore, falling oil prices and recession fears weighed heavily on the consensus estimate for the company’s first-quarter outing.
Aramco’s net profit for the first three months of the year was up 3.75% from the fourth quarter of 2022. According to the Dhahran-based company, its weaker earnings result was counterbalanced by reduced taxes, higher finance, and extra income. Meanwhile, shares climbed 3.2% in early deals in Riyadh.
Saudi Aramco to Pay Out Q1 2023 Dividend of $19.5B Plus Add-Ons in Second Quarter
Amid its Q1 2023 earnings development, Saudi Aramco said it would pay out its first-quarter dividend in the second quarter. Furthermore, the company’s investors stand to gain more proceeds, as the Q1 dividend was increased in the last quarter of 2022 to $19.5 billion. Aramco also revealed plans to start paying a performance-linked dividend on top of the base $19.5 billion allocation. According to the world’s largest oil exporter, it will earmark 50% to 70% of its free cash flow sum for this bonus dividend commitment. However, the Saudi petroleum and natural gas company pointed out that it will pay the performance-linked dividend quarterly. In addition, Aramco said payment would depend on performance for the given period and at the sole discretion of its board.
Aramco chief executive officer Amin Nasser touched on the company’s downstream interests and explained it heavily prioritizes that sector. Noting that the Middle Eastern oil corporation invested substantially in petrochemical and other related operations, Nasser added:
“We are leveraging cutting-edge technologies to increase liquids-to-chemicals capacity and meet anticipated demand for petrochemical products.”
The Saudi Aramco CEO also stressed the continued importance of hydrocarbons for global energy needs. In Nasser’s own words, they “believe oil and gas will remain critical components of the global energy mix for the foreseeable future”.
Nasser added that Aramco is forging ahead with its capacity expansion plans, and its long-term outlook remains the same.
Aramco Web3 Push
In February, Aramco signed a memorandum of understanding with Web3 facilitator droppGroup to explore blockchain technology. The deal underscored the oil company’s plans to become an early adopter of the decentralized technology in Saudi Arabia.
A release revealed that Aramco seeks to leverage the new partnership with droppGroup to develop Web3-based applications. These applications will assist employees with onboarding, tokenized networks, rewards, and training ecosystems.