Saudi Aramco's net profit for the quarter was $25.5 billion, compared with $6.6 billion in the same period in 2020.
The results beat expectations, with analysts expecting a median net profit of $24.7 billion for the quarter.
Aramco, the Saudi state-owned oil giant, reported an astonishing 288% increase in second-quarter net profit to $25.5 billion.While maintaining its dividend of $18.8 billion, as a large amount of oil has benefited from rising oil prices and a recovery in global demand.
Saudi Aramco's net profit for the quarter was $25.5 billion, compared with $6.6 billion in the same period in 2020. The results beat expectations, with analysts expecting a median net profit of $24.7 billion for the quarter.
Saudi Aramco said net profit in the first half of this year was $47.2 billion, compared with $23.2 billion in the first half of 2020, an increase of 103 per cent. The company said the result was supported by global easing of Covid-19 restrictions, vaccination campaigns, stimulus measures and accelerated key market activities.
Dividend plan
Saudi Aramco said free cash flow was $22.6 billion in the second quarter and $40.9 billion in the first half of 2021, compared with $6.1 billion and $21.1 billion in the same period in 2020.
This is important because free cash flow now exceeds the quarterly dividend of $18.75 billion for the first time since the start of the pandemic. Saudi Aramco has paid the world's largest dividend, but the improving outlook has prompted some analysts to call for higher dividends.
"dividends need to be increased to remain competitive," said Bank of America.Analysts said in a research report before the earnings release. "higher oil prices and increased production driven by OPEC + should support a significant increase in free cash flow in the coming years," it added.
Saudi Aramco responded that its dividend remained "normal" this quarter, but would "later make recommendations on whether to stick to the current dividend plan".
Saudi Aramco, which is majority owned by the Saudi government, is the country's main source of income.. "all of this will be reviewed with our board of directors, and we will decide later whether there is any additional dividend distribution," Nasser said.
Price prospect
Oil prices soared about 40 per cent to about $70 a barrel in 2021, prompting oil giants BP and ChevronAnd Royal Dutch Shell raised dividends and launched a share buyback program.
"our expectation is that the recovery will continue," Nasser said. "We are seeing more economies open up, and we expect demand to reach about 99 million barrels by the end of the year. Total demand for next year is forecast to be 100 million barrels, "he added.
Saudi Aramco also said it had reduced its asset-liability ratio (mainly the ratio of corporate debt financing to shareholder equity financing) from 23 per cent on December 31, 2020 to 19.4 per cent on June 30. The decrease is mainly due to higher cash and cash equivalents and stronger operating cash flow, as well as gains related to Saudi Aramco's recent crude oil pipeline transactions.
Capital expenditure was $7.5 billion in the second quarter and $15.7 billion in the first half of 2021, up 20 per cent and 15 per cent, respectively. Saudi Aramco says capital expenditure is expected to be about $35 billion in 2021.
Crown Prince Mohamed Ben Salman of Saudi Arabia said the country would sell more Ami shares earlier this year, but the company did not comment on the plans.
"We continue to press ahead with a series of strategic plans that focus on sustainability and low-carbon fuels, maximize the value of our assets and advance our journey of downstream integration and expansion," Nasser added.
"for all these and more reasons, I am still very optimistic about the second half of 2021 and beyond."