Profits Down

• Video: Aramco Slash Dividends
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Financial Performance & Market Reaction

Saudi Aramco's financial performance has been impacted by declining oil prices, leading to a reduction in both net income and dividends. In 2024, the company reported a net income of $106.2 billion, down from $121.3 billion in 2023. Market analysts attribute this decline to weaker global oil demand, OPEC+ production cuts, and macroeconomic challenges.

Investors reacted negatively to the earnings report, with Aramco’s stock showing volatility following the announcement. The broader market is now evaluating how these results affect long-term energy investments.

Dividend Cut & Impact on Shareholders

Aramco has significantly reduced its total dividend payout for 2025, projecting $85.4 billion, a sharp drop from the $124 billion distributed in 2024. This move impacts both institutional investors and the Saudi government, which heavily relies on Aramco’s payouts to support economic diversification efforts.

Compared to other oil majors like ExxonMobil and Shell, Aramco's dividend policy has historically been more stable. However, this recent cut reflects the shifting dynamics in the global energy market.

Future Outlook & Investor Sentiment

Despite these financial setbacks, analysts maintain a cautiously optimistic outlook. Free cash flows are expected to rise significantly by 2030, driven by increased efficiency and potential oil demand recovery.

Additionally, OPEC+ has signaled plans to increase output in April, which could provide Aramco with a revenue boost. However, long-term risks such as geopolitical instability and the global energy transition remain key considerations for investors.

Sources

• MarketWatch - The world's biggest dividend has just been cut. Here's why.
• Reuters - Aramco signals sharply lower dividends as special payout shrinks.
• The Times - Dividends down at Saudi Aramco after oil prices slide.

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