Saudi Arabia’s state-owned oil giant saw a 25 percent drop in profit and warned it would slash spending for the rest of the year amid a sharp slide in crude prices and weakened demand due to the COVID-19 pandemic.
The $112 billion Saudi Aramco, the world’s largest company, earned $16.7 billion in the first quarter as revenue fell 16 percent to $60.15 billion.
“In addition to seeking to minimize and mitigate the impact of the current economic situation, we are maintaining a firm focus on long-term growth and value creation as uncertain environments also present opportunities,” said Aramco CEO Amin Nassar.
Aramco plans to cut capital spending to between $25 billion and $30 billion in fiscal year 2020, down from $32.8 billion a year ago. Other oil giants like Exxon Mobil, Chevron and Shell have all reduced expenditures as they navigate lower crude prices.
Brent crude oil, the international standard, plunged 53 percent during the three months through March as a price war between Saudi Arabia and Russia exacerbated a supply glut while coronavirus lockdowns began sapping demand.
Last month, the world’s largest producers, including Saudi Arabia, agreed to reduce production by about 20 million barrels per day.
Aramco declared an $18.75 billion dividend payout despite the sharp drop in oil prices hitting its bottom line. The company has pledged a $75 billion dividend to shareholders this year after a $73.2 billion payout in 2019.
The dividend is critical for Saudi Arabia, which has a 98 percent stake in Aramco.