- Saudi state oil giant Aramco posted a 23% drop in net profit to $32.6 billion in the third quarter ended September 30.
- The result marked a sharp decline from $42.4 billion in the same period last year.
- The decline in profitability this year was in line with industry trends, with energy companies such as ExxonMobil and Chevron posting sharp year-over-year declines in the third quarter.
Saudi state oil giant Aramco posted a 23% drop in net profit to $32.6 billion in the third quarter ended September 30, due to “the impact of lower crude oil prices and volumes sold,” the company said on Tuesday .
Third-quarter net income was a sharp decline from $42.4 billion in the same period last year, but still beat analyst estimates of about $31.8 billion.
The company’s free cash flow fell to $20.3 billion, less than half of what was $45 billion in the third quarter of 2022.
Aramco continued to pay out $29.4 billion in dividends to investors and the Saudi government. Of this, $19.5 billion is the base dividend, which will be paid out in the fourth quarter, and another $9.9 billion is the performance-based dividend.
The $9.9 billion distribution is scheduled to be paid “in the fourth quarter based on the combined full-year 2022 and nine-month 2023 results,” the company said in its earnings release.
Capital spending rose to $11.02 billion this quarter from $9.03 billion in the third quarter last year. Aramco’s expansions include entering into an agreement for its first international investment in liquefied natural gas (LNG) and its “plan to enter the South American market through a downstream retail acquisition,” the company said.
The decline in profitability this year is consistent with industry trends: Energy companies such as ExxonMobil and Chevron posted sharp annual declines in the third quarter as weaker oil prices permeate the sector.
Saudi Arabia, as a top producer and leader of the Organization of the Petroleum Exporting Countries, has made several production cuts, both under formal OPEC policy and through individual voluntary withdrawals. It is continuing a voluntary cut in oil production of 1 million barrels per day through the end of the year and will reconsider that production strategy in December.
“Our robust financial results strengthen Aramco’s ability to generate consistent value for our shareholders, and we continue to identify new opportunities to develop our business and meet the needs of customers,” Amin Nasser, president and CEO of Aramco, said in a statement accompanying statement.
In August, Fortune magazine ranked Aramco as the world’s second-largest company by revenue, behind only Walmart and ahead of Apple and Amazon. The rankings followed Aramco’s announcement of annual profits for 2022 of over $160 billion – the highest ever for a listed company – as oil prices hit their highest in several years thanks to Russia’s invasion of Ukraine years.