Oil behemoth Aramco beats forecasts with record Q2 profit of $48.4bn

Update Oil behemoth Aramco beats forecasts with record Q2 profit of $48.4bn
The oil giant was expected to report $46.2 billion in net income based on 15 analyst forecasts. (Shutterstock)
Short Url
Updated 14 August 2022

Oil behemoth Aramco beats forecasts with record Q2 profit of $48.4bn

Oil behemoth Aramco beats forecasts with record Q2 profit of $48.4bn
  • The oil giant was expected to report $46.2 billion in net income based on 15 analyst forecasts.
  • Profits of “the most profitable oil company in the world” hit SR182 billion ($48.4 billion) after revenue soared 80 percent to SR562 billion.

RIYADH: Saudi Aramco’s profit has surged 90 percent in the second quarter of 2022, beating the median of analysts’ forecasts with the highest quarterly profit since going public in 2019.

The oil giant was expected to report $46.2 billion in net income based on 15 analyst forecasts.

Profits of “the most profitable oil company in the world” hit SR182 billion ($48.4 billion) after revenue soared 80 percent to SR562 billion, according to a bourse filing.

This is up from SR148 billion in the prior quarter and SR95.5 billion in the second quarter of 2021.

The crude producer said the results were primarily driven by rising crude prices which soared to record highs earlier this year, higher volumes sold, and improved downstream margins.

“Our record second-quarter results reflect increasing demand for our products — particularly as a low-cost producer with one of the lowest upstream carbon intensities in the industry,” said CEO, Amin Nasser, commenting on the results.

“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential — both to help ensure markets remain well supplied and to facilitate an orderly energy transition,” he added.

Further to the solid results, Aramco maintained stable quarterly dividends at SR70.3 billion, representing a per-share payout of SR0.3198 to be paid on Sept. 7.

Capital expenditure during the quarter grew 25 percent to $9.4 billion as Aramco continued to invest and capture growth opportunities.

In terms of half-year performance, Aramco outperformed with an 86 percent profit surge to SR330 billion from SR177 billion a year earlier.

The Saudi-listed company almost doubled its revenue to SR1.03 trillion, compared to SR584 billion in the first half of 2021.

Buoyed by higher operating cash flow, Aramco managed to strengthen its balance sheet with a gearing ratio of 7.9 percent at June end, compared to 14.2 percent at the end of 2021.

“We expect oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts,” Nasser said.

“But while there is a very real and present need to safeguard the security of energy supplies, climate goals remain critical, which is why Aramco is working to increase production from multiple energy sources — including oil and gas, as well as renewables, and blue hydrogen.”

Speaking to Arab News, analysts said Aramco's strong first-half results were expected due to the increase in oil prices since the beginning of the year and the rise in production based on OPEC+ agreement.

“I believe in the second half of 2022 Aramco will continue this huge growth,” said Saudi economist Ali Alhazmi.

“We can see oil prices are currently ranging between $95 and $105 a barrel, this will make Aramco by the end of 2022 in the same position or maybe second-half profit will be slightly lower by 5-10 percent if oil prices remain at this rate,” he added.

Recent highlights:

  • Aramco and Cognite, a global leader in industrial software, announced the launch of CNTXT, a joint venture based in the Kingdom, which will be headquartered in Riyadh. CNTXT will support industrial digitalization in Saudi Arabia and the wider Middle East and North Africa region.
  • Aramco was reported to weigh an initial public offering of its unit Aramco Trading Co. that could potentially raise over $30 billion, slated to become one of the world’s biggest listings this year.
  • Aramco joined hands with Thailand's national oil company PTT, as it expands its footprints in Asia. Both companies will work together in areas of blue and green hydrogen and various clean energy initiatives.
  • Aramco acquired US-based Valvoline Inc.’s global products unit in a $2.65 billion deal.

Closing bell: Saudi bourse slips 82 points to 10,702  

Closing bell: Saudi bourse slips 82 points to 10,702  
Updated 7 sec ago

Closing bell: Saudi bourse slips 82 points to 10,702  

Closing bell: Saudi bourse slips 82 points to 10,702  

RIYADH: Saudi Arabia’s Tadawul All Share Index on Thursday lost 81.94 points — or 0.76 percent — to close at 10,701.79.  

MSCI Tadawul 30 Index dropped 0.95 percent to 1,475.52, while the parallel market Nomu slipped 0.79 percent to 18,996.50.  

TASI’s total trading turnover of the benchmark index on Thursday was SR4.04 billion ($1.08 billion), with 77 stocks of the listed 224 advancing and 130 retreating.  

Salama Cooperative Insurance Co. was the topmost gainer for the second day in a row, rising 5.84 percent on Thursday to SR16.30.   

The other top gainers were Dar Alarkan Real Estate Development Co., Saudi Arabian Cooperative Insurance Co., Knowledge Economic City and Americana Restaurants International.  

The worst performer on Thursday was Alinma Bank, which fell 4.25 percent to SR31.55. The bank on Feb. 2 posted a net profit increase of 33 percent to SR3.59 billion in 2022 from SR2.70 billion in 2021.  

The net profit growth was driven by an increase in total operating income by 19.6 percent year-on-year, mainly due to higher net income from financing and investment, fee income, the fair value of investments income through the income statement and currency exchange income.   

Net income from specialized commissions, financing and investments increased 18 percent to SR6.01 billion in 2022 from SR5.14 in 2021.  

The net profit for the fourth quarter of 2022 grew 39 percent to SR860.2 million from SR619.1 million during the same period in 2021.   

The other stocks that performed poorly included Dr. Sulaiman Al Habib Medical Services Group, Banque Saudi Fransi, Saudi Industrial Investment Group and Etihad Etisalat Co.  

Among sectoral indices, 14 of the 21 listed on the stock exchange declined, while the rest advanced.  

The Real Estate Management & Development Index was the best-performing sector of the day as it gained 2.14 percent to 2,733.75, points led by Dar Alarkan Real Estate Development Co.’s 4.85 percent leap to SR12.96.  

The Healthcare Equipment & Service Index was the worst-performing sector, losing 169.9 points to close at 9,384.11.  

On the announcements front, Bank AlJazira also reported a rise of 10 percent in 2022 net profit to SR1.10 billion, compared to SR1 billion in 2021.  

The growth was spurred by a 10 percent decline in total operating expenses year on year.   

“The reduction in total operating expenses came primarily due to a decrease in the net impairment charge for financing and other financial assets, impairment charge for another real estate, rent and premises-related expenses and depreciation and amortization expenses,” the bank said in a statement to Tadawul.  

In the fourth quarter of 2022, net profit rose 7 percent to SR243.8 million from SR228.8 million a year earlier. Bank AlJazira’s share price fell 0.52 percent to SR19.16.  

Saudi Chemical Holding Co., through its pharmaceutical sector represented by the subsidiary AJA Pharmaceutical Industries Ltd, signed on Feb. 1 a memorandum of understanding with Lagap SA, a Swiss-based pharmaceuticals producer.  

The MoU was signed at the Saudi Export stand during the Arab Health Exhibition 2023, the company said in a statement to Tadawul. The MoU is aimed at the co-development of pharmaceutical products and launching them in European and Middle East markets. The company’s share slumped 2.33 percent to SR27.30. 


Saudi-based developer RSG achieves top green rating for its workers’ village

Saudi-based developer RSG achieves top green rating for its workers’ village
Updated 34 min 14 sec ago

Saudi-based developer RSG achieves top green rating for its workers’ village

Saudi-based developer RSG achieves top green rating for its workers’ village

RIYADH: Saudi-based developer Red Sea Global has achieved a Platinum Leadership in Energy and Environmental Design certification for a collection of villas and townhouses built for the company’s staff.

The certification, also referred to as LEED, was awarded by the non-profit US Green Building Council for the developments at Turtle Bay – a residential and commercial area housing workers, employees and management of The Red Sea.

The platinum certification poses the highest level of accreditation achievable under the LEED Homes rating system, and means Red Sea Global is the owner of the largest portfolio of LEED Homes certified buildings in the Kingdom, according to a statement.

“To be one of the world’s most responsible developers, we must ensure every aspect of our destinations meets the highest possible sustainable standards. Achieving LEED Platinum for The Red Sea’s Turtle Bay villas and townhouses demonstrates to our key stakeholders that we are meeting and exceeding our sustainability objectives,” said Group CEO of RSG John Pagano, in a statement.

In addition to this, Red Sea Global's sustainability accreditation management system is targeting to achieve LEED Building Design & Construction certifications for over 75 percent of its assets, as well as a LEED Cities & Communities for its destinations, the statement revealed.

The multi-project developer is also aiming to attain LEED Platinum on other key developments, including the Red Sea International airport, hospitality assets, among others.


Modon to develop and operate 14 automated warehouses in Jeddah 

Modon to develop and operate 14 automated warehouses in Jeddah 
Updated 02 February 2023

Modon to develop and operate 14 automated warehouses in Jeddah 

Modon to develop and operate 14 automated warehouses in Jeddah 

RIYADH: The Saudi Authority for Industrial Cities and Technology Zones, also known as Modon, is set to establish, develop and operate 14 warehouses in Jeddah 1st Industrial City.  

The new warehouses will be based on smart automated systems to provide quick and temporary logistical solutions to support industrialists and entrepreneurs as well as stimulate investment in the retail sector.  

According to Modon, the project involves the construction of fully digital and automated warehouses that do not need human intervention, using the latest technology and equipment that provides access to storage units via a smartphone app.  

The project is set to offer 24-hour customer service to provide immediate and thorough support.  

The warehouses will be operated based on the public-private partnership model, which is expected to enhance quality standards and operational efficiency of services and products and stimulate investment. 


Saudi fintech firm Raqamyah gets SAMA license to offer crowdlending solutions  

Saudi fintech firm Raqamyah gets SAMA license to offer crowdlending solutions  
Updated 02 February 2023

Saudi fintech firm Raqamyah gets SAMA license to offer crowdlending solutions  

Saudi fintech firm Raqamyah gets SAMA license to offer crowdlending solutions  

CAIRO: Riyadh-based fintech firm Raqamyah has received a license from the Saudi Central Bank, also known as SAMA, to offer its debt-based crowdlending solutions to small and medium enterprises.  

The license was granted after the company successfully passed testing its solutions within the SAMA’s regulatory sandbox, an experimental environment dedicated to innovative financial products and services in Saudi Arabia.  

Founded in 2017, Raqamyah enables SMEs to access Shariah-compliant financing of up to $1.3 million from individual and institutional lenders through its online platform and has been part of SAMA’s regulatory sandbox since 2019.  

SMEs apply for financing applications with the firm and receive approval within three working days to list their business on the platform where lenders start funding the request.  

The financers then receive monthly payments and profits as the businesses make their repayments. The platform also offers lenders to automate their lending investments so whenever there’s an opportunity that fits the criteria.  

In February 2021, Raqamyah secured $2.3 million in a funding round led by Impact46 which was used to comply with SAMA’s licensing requirements. 

The bank said its licensing of fintech companies contributes to achieving the objectives of the Financial Development Sector strategy aligned with Vision 2030.   

“SAMA reiterates its commitment to support the finance sector, increase the efficacy and flexibility of financial transactions and enable innovation in financial services to promote financial inclusion in the Kingdom and provide easy and secure access to financial services to all segments of society,” it said in a press release. 

Last month, the central bank issued licenses to two fintech firms — Forus and Tameed — both specializing in debt-based crowdfunding.  

Also earlier in January, the central bank announced the launch of a new lab to allow businesses to test their products against an established framework.   

The service is a new concept that enables consumers of financial institutions to securely share their data with a third-party provider, facilitating innovative services and products. 


Aldar joins with Dubai Holding to build 9,000 new homes

Aldar joins with Dubai Holding to build 9,000 new homes
Updated 02 February 2023

Aldar joins with Dubai Holding to build 9,000 new homes

Aldar joins with Dubai Holding to build 9,000 new homes

RIYADH: Abu Dhabi based Aldar Properties is set to begin devlopments in Dubai after signing a joint venture agreement with Dubai Holding to build 9,000 new homes across three communities in Dubai.

The developments will take place in the suburban heart of the city along the E311 and E611 corridors across 38.2 million sq. ft of land. according to a press release.

Work is set to begin this year, according to a press release.

“Our entry to Dubai is a milestone moment for Aldar, and we are excited about our long-term growth potential in the emirate alongside Dubai Holding, a prominent and strategic partner,” said Group CEO at Aldar Properties Talal Al Dhiyebi.  

Aldar will be in charge of the entire development cycle, including concept design, sales, delivery, and management of the developments.

“The JV with Aldar demonstrates Dubai Holding’s unparalleled track record of being the strategic ‘partner of choice’ for strong regional and institutional investors. In line with our vision to operate For the Good of Tomorrow, we will continue to unlock opportunities that position Dubai as a leading destination for investments from across the globe,” noted Amit Kaushal, CEO of Dubai Holding.

“By joining forces with Aldar, one of the market leaders in this field, we are delivering on a shared objective of driving the UAE’s economic growth and creating long-term, sustainable value for all our stakeholders,” Kaushal added.