Aramco: strong financials in a difficult time
Saudi Aramco has announced its first quarter (Q1) of this year financial results.
Despite the difficult time that the whole world is going through due to the widely spread negative effect of Coronavirus (COVID-19) & the great financial damage it has caused to the world financial markets, yet Saudi Aramco was able to report strong and solid financial results in Q1 of this year.
Indeed the results reported could have been much better than ever, however, as Eng. Amin H. Al-Nasser, President & CEO of the company has stated that he wasn’t surprise that the financial performance of the company in the first three months of 2020 was impacted by the ongoing effects of the COVID-19 global pandemic as well as lower oil prices which I totally agree with. However, despite the fact the company has reported net income of US$16.7 billion, ROACE of 26.3%, free cash flow of US$15.0 billion & a gearing ratio of -4.9%.
By all means such financial results are very strong & healthy considering the unprecedent negative impact of Coronavirus which the whole world did not face like it in our modern time since the second world war before 75 years.
Also, I totally agree with the CEO’s statement that the Q1 finical results of this year, were exceptionally strong due to the prudent balance sheet management & low-cost structure which made the company able to declared a dividend of $18.75 billion for quarter.
These strong results prove that the company possess the agility, the strength & the resilience across different economic cycles to continue operating strongly & efficiently.
It is worth mentioning that the company as stated by its CEO, has took steps to optimize its planned 2020 capital spending, while working to identify opportunities to further improve operational productivity. Such going forward thinking & positive attitude has significantly reflected on the company’s flexibility to further adjust its expenditures to response to the disruption caused by the coronavirus on both economic activity and energy demand.
To conclude, I believe & agree with the company’s insight into the future, that despite the very disrupted & confused business environment that the world is going through because of COVID-19, however, it managed to sail safely with its team through rough waves & strong winds caused by the pandemic with a minimum negative impact due to its focus on long-term growth & value creation as uncertain environments also present opportunities.