Saudi Aramco posts revenue drop

MG News | August 05, 2025 at 12:51 PM GMT+05:00
August 5, 2025 (MLN): Saudi Aramco posted a drop
in second-quarter revenues, citing lower crude oil and refined chemical
products prices that were only partially offset by higher traded volumes, on Tuesday.
The world’s largest oil company declared an adjusted net
income of 92.04 billion Saudi riyal ($24.5bn) over the three months to the end
of June, according to CNBC.
The result compares
with a forecast of adjusted net income of $23.7bn, estimated by the company.
Second-quarter revenues dropped to 378.83bn Saudi riyals
from 425.71bn Saudi riyal in the same period of the previous year.
“Market fundamentals remain strong and we anticipate oil
demand in the second half of 2025 to be more than two million barrels per day
higher than the first half,” Aramco CEO Amin Nasser said in a Tuesday statement
accompanying the results.
Capital expenditure picked up slightly to 46.2 billion Saudi
riyal in the June quarter, up from 45.5 billion Saudi riyal in the same period
a year prior.
“An in-line set of results this morning from Aramco, with
sequentially weaker upstream earnings offset by a recovery in refining
results,” RBC analysts said in a note following the results.
“With $25.5bn of capital investments in the first half of
2025, Aramco appears to be running lower than its guidance of $52-58bn for the
full year. While spending typically picks up in the second half of the year, we
think full year capex could come in towards the lower end of its guided range,
subject to acquisitions.”
Crude prices have stayed depressed over the course of the
year, barring a brief second-quarter flare-up sparked by Israel-Iran tensions,
as reported by CNBC.
Futures have been under pressure from an uncertain outlook
for demand, exacerbated since April by the rollout of Washington’s
wide-spanning tariffs. The protectionist trade measures muddy the picture for
growth in the world’s largest economy and the future of the U.S. dollar, which
denominates most commodities including crude oil.
Aramco’s income is set to see a boost from higher output,
after Saudi Arabia – and seven other OPEC and non-OPEC partners complete
unwinding 2.2 million barrels per day of voluntary cuts through a last
tranche in September.
Saudi Arabia most
recently produced 9.356 million barrels per day in June, according to
independent analyst estimates compiled in OPEC’s Monthly Oil Market Report.
Aramco has increasingly tapped debt markets, with two
issuances totaling $9bn in the second half of 2024 and a three-part bond
sale of $5bn this year. The company’s gearing ratio went up to 6.5% as of
June 30, 2025, compared to 5.3% as at March 31, 2025.
Front of mind for investors is the dividend policy at
Aramco, which in March slashed investor returns for 2025 to $85.4bn
down sharply from the $124.2bn of 2024 after a first-quarter decline in net
profits, as reported by CNBC.
Aramco declared a base dividend of $21.1bn and a
performance-linked dividend of $0.2bn in the third quarter.
The company’s dividend yield stood at 5.5% as of Monday,
still ahead of U.S. industry peer Exxon Mobil’s 3.6% and Chevron’s
4.5%, according to FactSet data.
Aramco’s payouts ripple sharply into the budget of Saudi
Arabia, which has been juggling diversifying its economy away from oil reliance
under Crown Prince Mohammed bin Salman’s signature Vision 2030 program.
Saudi Arabia’s gross domestic product expanded by 3.9%
in the second quarter, boosted by non-oil activities.
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