Saudi Aramco announced its financial results for the third quarter of 2024. The oil giant reported a decline in its Q3 2024 net profit, which fell by over 15 percent year-on-year (YoY) to $27.6 billion. This downturn was primarily driven by lower crude oil prices and diminishing refining margins. Analysts had anticipated a profit of $26.64 billion for the quarter, according to data from LSEG. Compared to the previous quarter, net profit decreased by 5 percent.
According to a statement, total revenue for Q3 reached $111.1 billion, marking a 2 percent decrease YoY. This reduction was largely due to declining prices for crude oil, as well as refined and chemical products, although it was partially mitigated by increased volumes sold during the period. Year-on-year capital expenditure rose to $13.2 billion from $11 billion, resulting in a total year-to-date capex of $36.2 billion. Free cash flow for the quarter was $22 billion, up from $20.34 billion in the same period last year, largely attributed to higher operating cash flows.
Aramco declared a base dividend of $20.3 billion and announced an additional performance-linked dividend of $10.8 billion set for distribution in Q4.
Investor confidence
In response to the results, Aramco President & CEO Amin H. Nasser commented that Aramco achieved solid net income and generated strong free cash flow in the third quarter, despite the challenging oil price landscape. He noted that the company made advances in its upstream developments, enhanced its downstream value chain, and progressed its new energies program, continuing to invest through various cycles. He highlighted that the recent $3.0 billion international sukuk issuance underscores the strong confidence investors have in Aramco and expressed pride in the significant progress the Company continues to make while maintaining high levels of profitability, operational performance, and reliability. He emphasized that as the company pursues strategic growth opportunities and captures value through integration and diversification, it aims to sustain its positive momentum and strengthen its position as a leading global player in energy and petrochemicals.
Read more: Saudi Aramco announces agreements with key Chinese partners
Collaborations announced at FII8
Recently, Saudi Aramco and Riyadh Air, the Kingdom’s new premium international airline, signed a memorandum of understanding (MoU) during the FII 8th Edition conference in Riyadh. This agreement lays the groundwork for potential collaborations in areas including low-carbon fuel supply and sustainability.
In addition to its collaboration with Riyadh Air, Aramco announced several partnerships with key organizations such as Taulia, the Saudi Industrial Development Fund, and Gas & Oil Pakistan during its participation at FII8. Aramco and Taulia, an SAP company recognized for its fintech solutions in working capital management, alongside the Saudi Industrial Development Fund (SIDF), established agreements to create a supply chain financing solution. This initiative aims to develop one of the world’s largest supply chain financing programs, providing an alternative and affordable financing source for Aramco’s suppliers. The financing solution is designed to unlock billions of Saudi Riyals in liquidity, enabling suppliers to optimize working capital, access alternative financing, and strengthen their business relationships. Furthermore, during the conference, Aramco inaugurated its first station in Pakistan in collaboration with Gas & Oil Pakistan, marking a significant milestone in its downstream expansion strategy.
Advocating for energy transition
In October 2024, Eng. Nasser advocated for a “Transition Plan 2.0,” an improved framework for energy transition that addresses the limitations of the existing strategy. He stressed that this new plan should consider the diverse needs of all nations, particularly those in Asia and the Global South. During a keynote address at the Singapore International Energy Week (SIEW), Al-Nasser underscored the importance of establishing a new energy transition framework that acknowledges Asia’s crucial role globally, the nature of its resources, and its potential for future growth. He remarked on the necessity for a revised transition strategy, suggesting that this could be Asia’s century, while also noting that the perspectives and priorities of Asia and the broader Global South are frequently overlooked in current transition plans, which affects the global landscape.
Additionally, he expressed concern that the transition pace is slower, less equitable, and more complex than expected, emphasizing that the focus should shift toward actionable solutions rather than merely theoretical approaches.
Successful sukuk issuance
In the same month, Saudi Aramco announced the successful completion of a $3 billion international sukuk issuance. This issuance consists of two U.S. dollar-denominated tranches: $1.5 billion maturing in 2029 at a profit rate of 4.25 percent per annum, and another $1.5 billion maturing in 2034 at a profit rate of 4.75 percent per annum. Priced on September 25, 2024, the sukuk securities were listed on the London Stock Exchange and saw a six-fold oversubscription, indicating robust investor demand. Moreover, both tranches were priced with a negative new issue premium, reflecting Aramco’s strong credit profile. This successful sukuk issuance is part of Aramco’s broader efforts to diversify and expand its investor base, enhance liquidity, and re-establish its sukuk yield curve.
For more news on banking & finance, click here.
