Saudi Aramco increases dividends to nearly $100bn despite lower profits

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

State-owned Saudi Aramco boosted its dividend despite profits falling in 2023 to $121bn — down from the record $161bn set in 2022 — as lower oil prices and state-led production cuts weighed on performance.

The energy group said net income in the final three months of the year was in line with the average analyst estimates of $26.7bn. Although the full-year figure was down 24.7 per cent on 2022, profits still surpassed the $111bn reported in 2021 to be the second-highest ever.

Saudi Aramco said it would increase its quarterly dividend payment by 4 per cent year-on-year to $20.3bn and pay an additional performance-linked dividend of $10.8bn. The company introduced the performance dividend in the second quarter of last year to boost returns to shareholders, specifically the state and the Saudi sovereign wealth fund, which own 82 per cent and 16 per cent of the company respectively.

Aramco’s total dividends for the year rose 30 per cent on 2022 to $97.8bn.

The payout remains the most important source of revenue for Crown Prince Mohammed bin Salman, who wants to use oil profits to fund an ambitious programme to modernise the kingdom and diversify the economy.

The company’s total capital expenditure in 2023 was $49.7bn, compared with $37.6bn in 2022. Free cash flow from operations was $101bn, compared with $148.5bn in 2022 and $107.5bn in 2021.

Saudi Aramco said it produced an average of 12.8mn barrels a day of crude oil and other liquids last year, compared with 11.5mn b/d in 2022.

Saudi Arabia has reduced its own oil production by approximately 2mn b/d in the past 18 months, through a series of cuts with other Opec+ members, in an attempt to prop up prices. Last month it dropped a multibillion-dollar investment programme to increase its maximum production capacity further to 13mn b/d by 2027.