Energy company Saudi Arabian Oil Co. reported a 73.4 percent year-over-year drop in profit for the second quarter.
The Saudi Arabia state-owned company attributed its poor performance to an international fall in energy demand and oil prices caused by the coronavirus.
Saudi Aramco reported a net profit of 24.6 billion riyals, or roughly $6.57 billion, for the period ended June compared with 92.6 billion riyals a year before. Analysts had expected 31.3 billion riyals for the period.
It will lower its expected capital expenditure for the rest of the year to between $25 billion and $30 billion as a result of the pandemic. The past two quarters were the worst reporting periods for the oil industry, according to Al Rajhi Capital analysts. However, not only did Saudi Aramco survive the crisis but it reported healthy figures, they said.
In spite of the big fall in profit the company told shareholders it would stick to its dividend plans this year. The company, which listed in Riyadh last year, previously said it planned to pay dividends of more than $75 billion for 2020. For the second quarter Saudi Aramco said it would pay out $18.75 billion in dividends.
Oil demand will recover and profits will rebound in the coming quarters, Saudi Aramco chief executive officer Amin Nasser said during the company's earnings call Sunday. Nasser said the company had already seen a partial recovery in the international energy market.
China was an example of recovering oil demand, he said. Diesel demand in China is now inching closer to prepandemic levels, he said. Demand in other parts of Asia is slowly recovering, too.
International economies demand for transport, including air travel, is expected to pick up. For most of the second quarter oil-and-gas companies took a hit as countries shut borders and restricted the movement of citizens. The unprecedented drop in oil consumption resulted in oil prices falling to their lowest in decades.
