In a noteworthy financial maneuver, Saudi Arabian Oil Company, famously known as Saudi Aramco, has resolved to continue distributing substantial dividends despite posting lower interim profits for the first six months of the year. This decision reflects the company's ambitious aim to maintain its status as a leader in dividend payouts within the industry.
On Tuesday, Aramco announced a second-quarter dividend of 0.4815 Saudi riyal per share, which encompasses a base dividend of 0.3145 riyal per share coupled with a performance-linked dividend amounting to 0.167 riyal per share. This upcoming distribution, set for August 29, represents an increase from the 0.4554 riyal per share disbursed during the same period last year.
Such a commitment highlights the company's strategy of balancing immediate shareholder returns with long-term growth aspirations amid fluctuating market conditions. Looking ahead, Aramco has projected an impressive $124.2 billion in dividend payouts for 2024, with a staggering $62.14 billion earmarked for the first half of the year alone.
Chief Executive Amin H. Nasser reiterated the firm’s focus on delivering sustainable dividends that reward shareholders while also sharing the gains derived from performance-linked strategies. "Leveraging these strong earnings, we continued to deliver a base dividend that is sustainable and progressive, and a performance-linked dividend that shares the upside with our shareholders," Nasser stated confidently.
During the reporting period, Aramco also pursued several strategic investment initiatives, which included purchasing a 40% equity stake in Gas & Oil Pakistan on May 31. Furthermore, shortly after, the company secured a deal to acquire a 10% equity interest in Horse Powertrain, a prominent manufacturer specializing in energy-efficient internal combustion and hybrid powertrains and transmissions.
This venture was notably made in conjunction with established partners including French automaker Renault, China's Zhejiang Geely, and Geely Automobile, with expectations for the deal to finalize by the close of 2024. These investments come in the context of a challenging economic environment marked by a decrease in crude oil volumes, declining refining margins, and lower financing returns that affected Aramco's net profit.
During the six months ended June 30, the company's net profit fell to 211.28 billion riyals, down from 232.35 billion riyals recorded in the previous year. However, the adverse impact was mitigated to some extent by rising crude oil prices, which were bolstered by easing inflationary pressures, anticipated seasonal demand growth, and diminishing global crude oil inventories.
Consequently, revenue remained relatively stable, reported at 827.75 billion riyals, compared to 820.02 billion riyals year-on-year. Amidst these financial developments, Aramco's stock experienced a near 2% increase on the Tadawul exchange around midday, signaling investor confidence and market resilience.
The stock price currently stands at $27.25, reflecting a positive change of $0.45 or 1.68%. Overall, these strategic decisions and adaptive measures position Saudi Aramco to navigate the complexities of the market while continuing to deliver value to its shareholders..