Q1 profits jump 30% for the kingdom's crown jewel

Q1 profits jump 30% for the kingdom's crown jewel

/ Financial News / Wednesday, 05 May 2021 11:00

Energy giant Saudi Aramco posted a 30% jump in first quarter profits, beating forecasts in a sign of recovery from last year's oil market crash fuelled by the coronavirus pandemic.

Aramco said its net profit rose to $21.7 billion in the first three months of the year, compared to $16.7 billion in the same quarter of 2020, owing to a stronger oil market and higher refining and chemicals margins.

"The momentum provided by the global economic recovery has strengthened energy markets," Aramco chief executive Amin Nasser said in a statement.

"Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming. And while some headwinds still remain, we are well-positioned... as economies start to recover."

Oil prices tumbled midway through last year's first quarter as the pandemic shuttered large parts of the global economy, piling pressure on petro-states including OPEC kingpin Saudi Arabia.

The strong earnings provide relief to Aramco, Saudi Arabia's cash cow, which has revealed consecutive falls in profits since it began disclosing earnings in 2019.

The first quarter profit beat a forecast of around $20 billion by RBC Capital Markets, which said the results highlight "Aramco's leverage to rising commodity prices".

Aramco declared a dividend of $18.8 billion for the first quarter. That is in line with the company's plan to pay an annual dividend of $75 billion – a key revenue source for the government, Aramco's biggest shareholder.

Saudi Arabia is currently seeking to monetize its energy assets, as it explores new revenue streams to fund its ambitious diversification drive. Last month, Aramco said it had struck a $12.4-billion deal to sell a minority stake in a newly formed oil pipeline business to a consortium led by US-based EIG Global Energy Partners.

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