Saudi Aramco’s profit soared in the first quarter following a recovery in global oil and gas markets, though free cash flow remained too low to fully cover dividend payments.
The world’s biggest energy firm kept its quarterly payout at $18.75 billion. The money is a vital source of cash for the kingdom.
The bumper results follow those last week of Big Oil firms such as Royal Dutch Shell Plc and BP Plc, whose earnings are back to pre-pandemic levels as major economies reopen and more people are vaccinated. Brent crude has gained 31% this year to more than $68 a barrel.
“There are more reasons to be optimistic that better days are coming,” Chief Executive Officer Amin Nasser said in a statement on Tuesday. “The momentum provided by the global economic recovery has strengthened
Aramco’s adjusted net income for the quarter was $21 billion, up 24% year-on-year and higher than analysts’ average estimate of roughly $19 billion. Free cash flow was $18.3 billion, an increase from $15 billion. The firm expects capital expenditure to be $35 billion in 2021.
The company, based in Dhahran in eastern Saudi Arabia, has seen its debt load spike as earnings collapsed with the spread of the pandemic and it opted to maintain the $75 billion annual dividend.
Aramco’s downstream business, which now includes contributions from Sabic, swung to a profit as higher commodity prices boosted margins for refined products such as transport fuels and plastics. Earnings before interest and tax for the unit were $4.4 billion, compared to a loss of $5 billion a year earlier.
The upstream business, mainly consisting of oil and gas production, saw profit rise 6.4% to $40 billion.