Saudi Aramco announces $75bn dividend despite ‘unprecedented, difficult’ year

Saudi Aramco announces $75bn dividend despite ‘unprecedented, difficult’ year
Earlier the world’s biggest oil company reported a 44.4 percent drop in net income to $49 billion in 2020. (Supplied)
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Updated 21 March 2021

Saudi Aramco announces $75bn dividend despite ‘unprecedented, difficult’ year

Saudi Aramco announces $75bn dividend despite ‘unprecedented, difficult’ year
  • Aramco, like other major oil producers, felt the impact of lower crude oil prices and weakened refining margins

DUBAI: Saudi Aramco, the world’s biggest oil company, made a profit of almost $50 billion in a year described by CEO Amin Nasser as “unprecedented and difficult.”

Announcing full year results for 2020 — during which global oil markets plunged as the coronavirus pandemic impacted demand — Nasser said that net income came in at $49 billion, “one of the highest earnings of any public company globally.”

Nasser said that the company “displayed strong financial resilience in one of the most challenging periods for the industry, during which revenues were impacted by lower crude oil prices and volumes sold, and weakened refining and chemicals margins.”

In 2019, before oil prices crashed and members of the OPEC+ alliance, including Saudi Arabia, cut production in response to falling demand, Aramco made $88.2 billion net income.


 

Despite the fall in profit, Aramco made good on its pledge at the time of its initial public offering to pay $75 billion in dividends to shareholders. Nasser told Arab News that Aramco planned to maintain dividends at that level and that there were no plans of an increase, as some analysts have speculated.

 

“We have declared $75 billion and that’s our planner this year, and there is no intention this year to declare any additional dividend beyond the $75 billion. These are always evaluated by the board and subject to board approval,” he said.

Capital expenditure will be cut to about $35 billion in 2021, he said, lower than previous guidance of as much as $54 billion.

“I am proud that despite the many challenges from COVID-19, Aramco demonstrated its unique value proposition through its considerable financial and operational agility,” he said.

The Aramco chief said that he was confident that demand for energy would rebound as global economies continue their recovery. “We foresee increased oil demand in 2021,” Nasser added, indicating that global demand for crude would be back to pre-pandemic levels of about 100 million barrels per day next year.

 

 

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track and, as the macro environment improves, we are seeing a pick-up in demand in Asia and also positive signs elsewhere. We remain confident that we will emerge on the other side of this pandemic in a position of strength,” Nasser said.

But demand from Europe, which is facing a third wave of coronavirus infections and renewed lockdowns, is lagging behind demand recovery in Asia and the US.

Asked about the effect on Aramco’s business of the recent attacks on facilities in Saudi Arabia, Nasser said that safety is the company’s top priority, adding that the Saudi government had been very successful in stopping attacks before they reached the Kingdom. “The most important thing is the readiness of our people,” he said.

“We are capable under any scenario of putting the facility back on stream,” he added, in reference to an attack last week that hit a facility in Riyadh, causing a small fire that was quickly put out with no impact on supply.

“Aramco continued its strong track record of supply reliability, despite disruptions caused by COVID-19, by delivering crude oil and other products with 99.9 percent reliability in 2020,” Nasser said.

Aramco achieved two milestones in 2020: The biggest single day of production of 12.1 million barrels in April after the OPEC+ cuts were briefly abandoned, and a daily record for gas production of 10.7 billion cubic feet.

Aramco borrowed more money in 2020, partly to help finance the $70 billion acquisition of SABIC, “a significant step forward in Aramco’s ambition to further expand its downstream business.”

Khalid Al-Dabbagh, Aramco’s chief financial officer, said that fuller details of borrowing would be available on Monday when detailed financial figures are published, but that gearing — the ratio of borrowing to equity value — would be slightly higher than the 21.8 percent level declared at the end of the third quarter.

Cash flow from operating activities in 2020 amounted to $76 billion, while free cash flow reached $49 billion.

Aramco’s international bond issuance in the fourth quarter achieved record demand for a 50-year tranche and was 10 times oversubscribed compared to its initial offering size. This global investor interest demonstrated market confidence in Aramco’s long-term strategy and performance outlook, the company said.

“Through its flexible capital program and prudent financial management, the company was able to adjust spending and focus on high-return opportunities. Capital expenditure in 2020 was $27 billion due to the implementation of optimization and efficiency programs, representing a significant saving on capital expenditure of $33 billion in 2019,” it added.

Nasser said that Aramco’s long-term strategy to optimize its oil and gas portfolio is on track, and that a special corporate unit to examine the possibility of selling parts of the business or entering into joint venture arrangements with international partners was still under consideration.

Aramco highlighted its initiatives in the cleaner energy sector. “Technology and innovation are key to delivering more energy with fewer emissions. Aramco continued to make advances in cutting-edge technology and received a company record of 683 US patents in 2020 — among the highest in its industry,” the company said.

 

 

Aramco maintained one of the lowest upstream carbon footprints in the industry, achieving an estimated upstream carbon intensity of 10.5 kilograms of CO2 per barrel of oil equivalent in 2020. The company’s estimated upstream methane intensity was 0.06 percent.

“These accomplishments are the result of the company’s decades-long reservoir management and production approach, which includes leveraging advanced technologies and minimizing emissions and flaring,” it said.

The company is well positioned to capitalize on developments in hydrogen, given its scale, infrastructure, low costs and low upstream carbon intensity.

One promising area is the conversion of hydrocarbons to hydrogen and then to ammonia, while capturing the CO2 created during the process. In August, Aramco exported the world’s first shipment of high-grade blue ammonia to Japan for use in zero-carbon power generation, a significant step towards sustainable hydrogen usage, the company said.

Aramco’s shares, quoted on the Tadawul exchange in Riyadh and the best performing of listed oil company stocks during the pandemic, rose 0.57 percent to SR35.40 ($9.44) after the results were announced.

Nasser paid tribute to the Aramco workforce in a difficult year. “Our exceptional performance during such testing times owed much to the unwavering spirit and resilience of our employees, who set operational records and continued to meet the world’s energy needs both safely and reliably.”


Aramco partners with Japan’s Yokogawa to localize chip manufacturing in Saudi Arabia

Aramco partners with Japan’s Yokogawa to localize chip manufacturing in Saudi Arabia
Updated 11 sec ago

Aramco partners with Japan’s Yokogawa to localize chip manufacturing in Saudi Arabia

Aramco partners with Japan’s Yokogawa to localize chip manufacturing in Saudi Arabia

RIYADH: Tokyo-based Yokogawa Electric Corp. has signed an initial agreement with Aramco to seed and localize semiconductor chip manufacturing in Saudi Arabia and boost growth in the industrial digital business domain.

Under the agreement, Aramco is to explore the possibility of utilizing Minimal Fab technology for semiconductor manufacturing, Argaam reported. 

Minimal Fab is a production system that enables high-mix, low-volume manufacturing of semiconductors and microelectromechanical systems without the need for a cleanroom.

The Japanese company will offer its expertise in deploying the technology to Aramco facilities, with the provision of related training, maintenance, and support services to ensure an end-to-end success.

The announcement comes as the world struggles with shortage of chips, with a recent US government report warning the problem could continue for more than six months.

 


34 US states back Epic Games in anti-trust suit against Apple

34 US states back Epic Games in anti-trust suit against Apple
Updated 28 January 2022

34 US states back Epic Games in anti-trust suit against Apple

34 US states back Epic Games in anti-trust suit against Apple
  • Attorneys-general accuse Apple of stifling competition

OAKLAND, California: Apple Inc. is stifling competition through its mobile app store, attorneys general for 34 US states and the District of Columbia said on Thursday, as they appealed against a ruling that let the iPhone maker continue some restrictive practices.

While dozens of state attorneys general have filed recent antitrust lawsuits against other big tech companies, including Facebook owner Meta Platforms Inc. and Alphabet Inc’s Google, none had so far taken aim at Apple.
Thursday’s remarks, led by the state of Utah and joined by Colorado, Indiana, Texas and others, came in a lawsuit in an appeals court against app store fees and payment tools between “Fortnite” video game maker Epic Games and Apple.
“Apple’s conduct has harmed and is harming mobile app-developers and millions of citizens,” the states said.
“Meanwhile, Apple continues to monopolize app distribution and in-app payment solutions for iPhones, stifle competition, and amass supracompetitive profits within the almost trillion-dollar-a-year smartphone industry.”
The action comes after a US district judge in Oakland, California, mostly ruled against Epic last year.
That decision found that commissions of 15 percent to 30 percent which Apple charges some app makers for use of an in-app payment system the company forced on them did not violate antitrust law.
Epic challenged the ruling in the 9th US Circuit Court of Appeals. On Thursday, professors, activist groups and the states weighed in through court filings that described legal arguments in support.
Apple’s reply is expected in March. On Thursday, the company said it was optimistic that Epic’s challenge would fail.
The states said in their filing that the lower court erred by failing to adequately balance the pros and cons of Apple’s rules and also by deciding that a key antitrust law did not apply to non-negotiable contracts Apple makes developers sign.
“Paradoxically, firms with enough market power to unilaterally impose contracts would be protected from antitrust scrutiny — precisely the firms whose activities give the most cause for antitrust concern,” they said.

 


Apple’s holiday iPhone sales surge despite supply shortages

Apple’s holiday iPhone sales surge despite supply shortages
Updated 28 January 2022

Apple’s holiday iPhone sales surge despite supply shortages

Apple’s holiday iPhone sales surge despite supply shortages
  • Apple to report iPhone sales of $71.6 billion for the October-December period

SAN RAMON, California: Apple shook off supply shortages that have curtailed production of iPhones and other popular devices to deliver its most profitable holiday season yet.
The results posted Thursday for the final three months of 2021 help illustrate why Apple is looking even stronger at the tail end of the pandemic than when the crisis began two years ago.
At that point, Apple’s iPhone sales had been flagging as consumers began holding on to their older devices for longer periods. But now the Cupertino, California, company can’t seem to keep up with the steadily surging demand for a device that has become even more crucial in the burgeoning era of remote work.
Apple’s inability to fully satisfy the voracious appetite for iPhones stems from a pandemic-driven shortage of chips that’s affecting the production of everything from automobiles to medical devices.
But Apple so far has navigated the shortfalls better than most companies. That deft management enabled Apple to report iPhone sales of $71.6 billion for the October-December period, a 9 percent increase from the same time in the previous year.
Those sales gains would have likely been even more robust if Apple could have secured all the chips and other components needed to make iPhones. That problem plagued Apple’s July-September quarter when management estimated that supply shortages reduced its iPhone sales by about $6 billion. The company may address how supply shortages affected its performance in the most recent quarter during a conference call with analysts scheduled later Thursday.
Despite what drag the shortages caused, Apple still earned $34.63 billion, or $2.10 per share, a 20 increase from the same time in the previous year. Revenue climbed from the previous year by 11 percent to $123.95 billion.
Apple’s ongoing success help push the company’s market value above $3 trillion for the first time earlier this month. But its stock price has tumbled 13 percent since hitting that peak amid worries about a projected rise in interest rates aimed at dampening the torrid pace of inflation that has been fueled in part by supply shortages.
Its shares gained more than 3 percent in Thursday’s extended trading after the Apple’s fiscal first-quarter numbers came out.
The supply issues looming around Apple’s devices have magnified the importance of the company’s services division, which is fueled by commissions from digital transactions on iPhone apps, subscriptions to music and video streaming and repair plans.
The up to 30 percent commissions collects from apps distributed through Apple’s exclusive app store have become a focal point of a fierce legal battle that unfolded in a high-stakes trial year, as well as proposed reforms recently introduced in the US Senate that tear down the company’s barriers that prevent consumers from using alternative payment systems.
For now, though, the services division is still booming. Its revenue in the past quarter hit $19.52 billion, a 24 percent increase.
Apple is widely believed to be maneuvering toward another potentially huge money-making opportunity with the introduction of an augmented reality headset that would project digital images and information while its users interact with other physical objects and people. True to its secretive form, the company has never said it is working on that kind of technology.
But Apple CEO Tim Cook has openly shared his enthusiasm for the potential of augmented reality in public presentations, and analysts believe the long-rumored headset could finally roll out later this year — unless it’s delayed by supply shortages.


Lebanon’s finance minister says replacing central bank governor is not ‘wise’

Lebanon’s finance minister says replacing central bank governor is not ‘wise’
Updated 28 January 2022

Lebanon’s finance minister says replacing central bank governor is not ‘wise’

Lebanon’s finance minister says replacing central bank governor is not ‘wise’

BEIRUT: Lebanon’s finance minister said on Thursday replacing the central bank governor, Riad Salameh, today is not “wise.”
Finance Minister Youssef Khalil told local broadcaster MTV that nobody proposed removing the central bank governor, but “I do not imagine changing the central bank governor today is a wise matter.”
Salameh, who has support from several top politicians, is being probed in Lebanon and at least four European countries, with his role under close scrutiny since Lebanon’s economic collapse in 2019.
Salameh denies any wrongdoing during almost three decades leading the central bank.


Aramco CEO says energy transition not going smoothly: Reuters

Aramco CEO says energy transition not going smoothly: Reuters
Updated 27 January 2022

Aramco CEO says energy transition not going smoothly: Reuters

Aramco CEO says energy transition not going smoothly: Reuters

BEIRUT: Saudi Aramco CEO Amin Nasser said on Thursday that the energy transition “was not going smoothly,” pointing to a resurgence in demand for oil and gas as the global economy recovers while supplies lag on the back of falling investment, according to Reuters.

“We all agree that to move towards a sustainable energy future a smooth energy transition is absolutely essential but we must also consider the complexities and challenges to get there,” he told the B20 conference in Indonesia via video link.

“We have to acknowledge that the current transition is not going smoothly,” he said.

- Reuters