Saudi Aramco reports 288% rise in Q2 net income at $25.5 billion

The Saudi Arabian Oil Company Aramco announced on Sunday its second quarter (Q2) 2021 financial results, reporting a 288 per cent increase in net income from the same quarter of last year to $25.5 billion and declaring a dividend of $18.8 billion.

The company’s net income for the first half of the year was $47.2 billion, representing a 103 per cent increase over the same period in 2020, said an Aramco statement.

The results were primarily driven by higher oil prices and a recovery in worldwide demand, supported by the global easing of COVID-19 restrictions, vaccination campaigns, stimulus measures and accelerating activity in key markets.

Commenting on the results, Aramco President and CEO, Amin H Nasser, said, “Our second quarter results reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum. While there is still some uncertainty around the challenges posed by COVID-19 variants, we have shown that we can adapt swiftly and effectively to changing market conditions.

“Our historic $12.4 billion pipeline deal was an endorsement of our long-term business strategy by international investors, representing significant progress in our portfolio optimisation programme. Our landmark $6 billion Sukuk reinforced our robust balance sheet, further diversifying our funding sources and expanding our investor base. And, once again, we delivered a dividend of $18.8 billion for our shareholders,” he said.

Financial Highlights Aramco’s net income was at $25.5 billion in the second quarter of 2021, compared to $6.6 billion in the same quarter of 2020. Net income for the first half of 2021 was $47.2 billion, compared to $23.2 billion in the first half of 2020. The increase in both periods was primarily driven by higher crude oil prices, improved downstream margins and the consolidation of SABIC’s results, partially offset by lower crude oil volumes sold and higher crude oil production royalties.

Free cash flow was $22.6 billion in the second quarter, and $40.9 billion for the first half of 2021, compared to $6.1 billion and $21.1 billion, respectively, for the same periods in 2020.

The gearing ratio was 19.4 per cent on 30th June, compared with 23 per cent on 31st December, 2020. The decrease was primarily due to higher cash and cash equivalents on 30th June, 2021, mainly driven by stronger operating cash flows and cash proceeds in connection with Aramco’s stabilised crude oil pipelines transaction.

Capital expenditure was $7.5 billion in the second quarter, and $15.7 billion for the first half of 2021, representing an increase of 20 per cent and 15 per cent, respectively, compared with the same periods in 2020. This increase was primarily due to the start of initial phases of construction and procurement activities relating to increment projects, demonstrating the company’s ability to mobilise capital to target growth opportunities, and the consolidation of Saudi Basic Industries Corporation’s [SABIC — an Aramco subsidiary] capital expenditure.

At the same time, the Company maintains a highly disciplined and flexible approach to capital allocation, and continues to expect its 2021 capital expenditure to be approximately $35 billion.