Aramco’s Profit Drop: A Rough Ride Through 2020
Hey folks, grab a cup of coffee – it’s going to be a long read about how the world’s biggest oil player’s earnings slid like a money‑made lazy boat downstream.
Half‑Year Numbers, Plain and Punchy
- H1 2020: Net income hit a 50 % slump, settling at just $23.2 billion.
- Back in 2019, the same period was a billboard of $46.9 billion.
- Second quarter 2020? Even more dramatic – a 73 % plunge from $24.7 billion down to $6.6 billion.
Why the Bellyache in the Barrel?
It wasn’t just Aramco’s “oops” moment. The oil market itself was a disaster stage:
- Brent crude began the year at $68.44 per barrel.
- By the end of April, it sank to a low of $20.46.
That’s the kind of liquidity drop that makes even the most seasoned oil tycoon feel the pinch.
Bottom Line With a Smile
Even the titan of Saudi oil got a tiny scar from the market’s roller coaster. It’s a reminder that no pipeline is too big to feel the ebb of global prices.
Saudi Aramco pays $37.5bn dividends in H1 2020
Aramco’s Cash Flow Conundrum: Dividends Outpaces Free Cash
In the first half of 2020, Saudi Aramco’s free cash flow fell to $20.6 billion—a sharp drop from the $38 billion seen in the same period a year earlier. Yet, the company still pumped out $37.5 billion in dividends during those six months. Short‑sighted? Or just a smiley corporate dare? According to Bloomberg, it’s a tall order to match those dividend payouts with cash flow until 2024.
Oil Prices and the Broader Picture
- Brent crude’s 2020 average: $41.19 per barrel (down from $64.34 in 2019, raw data from the U.S. Energy Information Administration).
- 2021 forecast (EIA): $47.07 per barrel, hinting at a gradual rebound.
- Despite the dip, Aramco outshined rivals like BP, which incurred a $6.7 billion loss, and Exxon Mobil, with a $1.1 billion hit.
Market‑Cap Tits and Turns
Aramco’s lofty throne was cemented in May 2020 when it topped the world charts with a $1.685 trillion market cap (Forbes). It also earned a spot in the fifth spot on the “best‑performing companies” list (CEO World). Just a day after its 2019 IPO, the giant hit a clean‑cut $2 trillion valuation—the first publicly traded company ever to achieve that figure.
But no throne is permanent. Mid‑August 2020 saw Apple briefly overtake Aramco as the largest listed company. The subsequent tech sell‑off in September turned the tide, allowing Aramco to reclaim its crown.
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