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Friday, May 3, 2024 21:30 GMT
Saudi oil giant Aramco’s debt-to-equity ratio more than doubled to 55% in 2020 from a year before, it said in a report, after the group kept a pledge to deliver a US$75 billion dividend to support state coffers despite a slide in profits. Net debt rose to 605.9 billion riyals (US$161.634 billion) last year from 270.2 billion riyals (US$72.080 billion) in 2019, the results showed. The world’s largest oil exporter said on Sunday net profit fell 44.4% to 183.8 billion riyals (US$49.031 billion) for the year ended December 31 as the Covid-19 pandemic depressed global crude demand.Analysts had expected a 2020 net profit of 186.1 billion riyals (US$48.445 billion), according to the mean estimate of analysts in Refinitiv’s Eikon. However it maintained its pledge to declare a US$75 billion dividend for 2020, most of which goes to the Saudi government. Aramco made its international bond market debut in 2019 ahead of its listing that year in a record US$29.4 billion share sale. Last year, as low oil prices hurt its balance sheet, it raised a US$10 billion loan and US$8 billion in bonds.HSBC said last month that Aramco’s prospects look more positive and promising for 2021, hinting at declining net debt and a possible dividend hike. But a recent request sent to banks to extend by a year the US$10 billion debt facility raised in May last year suggests rebounding crude prices are not pushing the oil giant to reduce debt for the time being. Aramco is likely to “do the heavy lifting” to boost state coffers and support mega-projects spearheaded by the kingdom’s state investor Public Investment Fund, Bank of America said in a note earlier this year.The government still owns a 98.2% stake in the firm and while it is diversifying its revenues away from crude, oil revenues still accounted for more than half the kingdom’s income last year. In its financial results report Aramco said payments to the government last year, including dividends, royalties and income taxes, totaled around 412 billion riyals (US$109.908 billion), about 30% less than in 2019. That was in line with Saudi estimates in December.Aramco is betting on an Asian-led rebound in energy demand this year after it reported the steep slide in net profit and scaled back its spending plans. The pandemic took a heavy toll on the company and its global peers in 2020, but oil prices have rallied this year as economies recover from last year’s downturn and after oil producers extended output cuts. “We are pleased that there are signs of a recovery,” Aramco CEO Amin Nasser told an earnings call. “China is also very close to pre-pandemic levels. So in Asia, East Asia in particular, there is strong pickup in demand.”He said demand in Europe and US would improve with more deployment of vaccines. Global oil demand is expected to reach 99 million barrels per day by the end of this year, he said. Aramco lowered its guidance for capital expenditure in 2021 to around US$35 billion from a range of US$40 billion to US$45 billion previously, according to a disclosure to the kingdom’s Tadawul bourse.