Aramco profits drop 19% to $31.9bn in Q1

• Net profit fell year on year, but has still exceeded market expectations
• $19.5bn first-quarter dividend to be paid
• Lower taxes and rise in other income helped offset drop, Aramco said

Saudi’s Aramco has reported a 19 percent drop in first-quarter profits year on year, mainly driven by lower crude oil prices.

Net profit at the oil group slipped to SR119.54 billion ($31.9 billion) for the first three months of 2023.

However, this was still 3.75 percent higher than the company’s performance in the final quarter of 2022 and exceeded market expectations.

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Aramco said the drop was partially offset by lower taxes and a rise in finance and other income, according to a statement to Saudi Arabia’s Tadawul exchange.

Amin Nasser, president and CEO of Aramco, said: “The results reflect Aramco’s continued high reliability, focus on cost and our ability to react to market conditions as we generate strong cash flows and further strengthen the balance sheet.”

Saudi Arabia’s benchmark index was up 0.5 percent early on Tuesday, helped by a 4 percent jump in Aramco’s shares.

Saudi Arabia and fellow Opec+ members revealed production cuts of 1.66 million barrels per day from May to the end of the year, with prices continuing to drop amid concerns over economic growth and interest rate hikes.

The kingdom reported revenue of SR280.94 billion in the first quarter of 2023, with oil revenues down 3 percent to SR178 billion.

The International Monetary Fund’s latest World Economic Outlook predicted that headline GDP growth in Saudi Arabia would drop to 3.1 percent from record levels last year.

Across the quarter, Aramco expanded its downstream business with acquisitions in China and Korea. It also completed the $2.76 billion deal for US-based motor oil and lubricant maker Valvoline.

Nasser said plans to increase capacity would continue. “Our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future.”

He revealed plans to introduce performance-linked dividends in addition to the base dividend, which is currently distributed.

A Q1 dividend of $19.5 billion will be paid in the second quarter, according to the statement.