Aramco, state-owned oil behemoth of Saudi Arabia, increased its dividend, even though its net profit dropped 24.7% to around $121.3 billion last year because of lower oil prices and volumes, indicating the country's continued dependence on oil revenue as it tries to diversify.
Aramco stated on Sunday that the profit, while not so high as the $161.1 billion in 2022, was still the second-highest for the company as it disclosed total dividends of $97.8 billion for the year, up 30%. 62% of the state's entire revenue in the previous year came from oil.
The substantial payouts from Aramco, which include taxes and royalties, are crucial to the Saudi government, since it directly owns approximately 82.2% of the oil giant. After relying on oil for several decades, the largest oil exporter in the world is now paying billions of dollars attempting to diversify its economy and seek for other sources of income.
According to CEO Amin Nasser, even with their big growth plans and dividend payments, the balance sheet of the company is still robust.
Nasser predicts the average daily demand for oil in the world in 2024 will reach 104 million barrels, up from 102.4 million in 2023.
The state is pursuing an ambitious economic goal known as its Vision 2030 under the leadership of the sovereign Public Investment Fund, which controls 16% of Aramco after a recent government transfer of 8% to PIF-owned enterprises last week.
For the fourth quarter, Aramco announced a $20.3 billion base dividend that will be paid out regardless of operating performance. This year, it plans to pay $43.1 billion of performance-linked dividends.
The performance-linked dividend climbed by roughly 9% year on year, while the base dividend increased by 4%.
Compared to $38.8 billion in 2022, the company reported that capital investments increased to $49.7 billion in 2023. It predicted that capital investments would expand from $48 billion to $58 billion this year.
Speaking on a media teleconference, the company's CFO, Ziad Al-Murshed, explained that the reason for the wide range is that there is an element of timing for foreign investments that they are not fully in control of.
In late January, Aramco was given an order by the Saudi government to abandon its intention to increase its output capacity to 13 million barrels per day (mbpd) and go back to the original 12 mbpd goal.
According to Aramco, the capacity decision will hopefully result in a $40 billion reduction in capital spending between 2024 and 2028.
Al-Murshed said that since the majority of the savings are planned to be used in later years, the exact allocation of funds will be determined as appropriate. The base dividend, further deleveraging, growth capex, sustaining capex, and other distributions are the top priorities for spending the extra cash.
