RIYADH - Energy giant Saudi Aramco said on Sunday its second-quarter profits plunged a massive 73 percent due to sharply lower oil prices as the coronavirus crisis undercuts global demand.
The behemoth, recently dethroned by Apple as the world's most valuable listed company, posted a net profit of $6.6 billion for the three months to June 30 compared to $24.7 billion for the same period of 2019.
The results are in line with analysts' expectations but stand in contrast to the losses reported by its rival energy giants, which are reeling from a drop in oil demand since the start of the novel coronavirus pandemic.
"Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results," Aramco's chief executive Amin Nasser said in a statement.
"Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce and unrivalled financial and operational strength."
Aramco's net profit for the first half of the year also slumped by 50.5 percent to $23.2 billion, compared to $46.9 billion in the same period last year.
The results underscore a downbeat oil market as pandemic-driven economic shutdowns crush the global demand for crude.
Five other leading oil firms -- BP, Chevron, ExxonMobil, Royal Dutch Shell and Total -- recently reported combined losses of $53 billion for the second quarter.
By contrast, Aramco's results reflected its "financial resilience", Nasser said, as the company presses ahead with a plan to pay $75 billion in dividends this year.
Nasser also voiced optimism over what he called a "partial recovery in the energy market" amid an easing of virus restrictions in some countries.
But amid low crude prices, Aramco is looking at cutting its 2021 budget by between eight and 10 percent from this year's already reduced levels, the Energy Intelligence group reported last month.
Aramco has said it expects capital expenditure to be at the "lower end of the $25 billion to $30 billion range" this year.
That is significantly lower than its expenditure of $32.8 billion in 2019, according to Energy Intelligence.
"Cutbacks have already caused Aramco to delay plans to expand production from its offshore fields," Energy Intelligence said in a report.
"The offshore program was a core element of a push to raise the company's oil production capacity."
The company has also slashed hundreds of jobs as it seeks to reduce costs, Bloomberg News reported in June.
Saudi Arabia, the world's biggest crude oil exporter, has been hit hard by the double whammy of low prices and sharp cuts in production.
A sharp drop in oil income is expected to hinder Crown Prince Mohammed bin Salman's ambitious plans to overhaul the kingdom's energy-reliant economy.
Oil prices dropped to a two-decade low below $20 a barrel in April and May as the coronavirus dampened demand, before recovering to around $44 a barrel after the OPEC+ producers agreed to record output cuts.
Following the move, Saudi oil production dropped to 7.5 million barrels per day in June, compared to last year's average of 10 million bpd.
Aramco's profits were also impacted by the losses posted by the Saudi Basic Industries Co. (SABIC), the petrochemicals giant it acquired for $69 billion in a deal completed this year.
The energy giant is bracing for a possible further wave of coronavirus infections that could impact a tentative global economic recovery and erode the demand for crude worldwide, analysts say.
Aramco was listed on the Saudi bourse in December following the world's biggest IPO, generating $29.4 billion for 1.7 percent of its shares.
US technology firm Apple last week replaced it as the world's most valuable company after its capitalisation grew to $1.9 trillion, compared to $1.76 trillion for Aramco.
Nasser said Aramco would distribute $18.75 billion in dividends for the second quarter to keep its listing promise of distributing at least $75 billion in annual dividends for five years.
"We are committed to delivering sustainable dividends through market cycles, as we have demonstrated this quarter," Nasser said in a media call, according to Bloomberg News.
"Our intention is to pay $75 billion, subject to board approval, of course, and market conditions."
Agence France-Presse
LONDON - The Bank of England increased its bond-buying program by 100 billion pounds ($125 billion) on Thursday as it sought to help steer the economy away from a record slump in March and April caused by the coronavirus lockdown.
The BoE kept its benchmark interest rate at 0.1%.
Eight members of the nine-strong Monetary Policy Committee voted to increase the bond purchase program while BoE Chief Economist Andy Haldane voted for no increase.
All nine members voted to keep Bank Rate unchanged.
The central bank said it would spend all the extra 100 billion on government bonds but would slow the pace of its purchases, saying it expected the new total 745 billion-pound target would be hit by the end of the year.
A Reuters poll of economists had pointed to a 100 billion-pound increase in the asset purchase program and Bank Rate remaining at 0.1%.
The BoE is using its bond-buying program as its main policy tool as it tries to help steer Britain's economy away from a record 25% slump in March and April.
There was no mention of the negative interest rates - an option the central bank has said it will consider - in the minutes of the BoE's policy meeting.
($1 = 0.7981 pounds) (Reporting by William Schomberg, editing by David Milliken)
-reuters-
JAKARTA - Indonesia's central bank on Thursday cut interest rates for the third time this year and scaled back its growth projections as the global pandemic batters Southeast Asia's biggest economy.
Policymakers at Bank Indonesia reduced the key lending rate by 25 basis points to 4.25 percent, while lowering their full-year economic growth forecast to between 0.9-1.9 percent, from a previous 2.3 percent.
The move comes days after the government warned of a 3.1 percent contraction in the second quarter -- the latest in a series of downward revisions.
Central bank governor Perry Warjiyo signaled there was "still room" to cut rates further in the coming months, but added that he expected growth to rebound next year.
"This (rate) decision is consistent with efforts to maintain stability and boost the economy during the COVID-19 era," he said Thursday.
Indonesia has announced a stimulus package worth some $48 billion to help offset the impact of coronavirus, which forced a wide-scale shutdown that hammered growth, including in the key tourism sector.
"We expect further gradual easing over the coming months," research house Capital Economics said, citing a "very poor outlook" for the economy.
"Virus containment measures are having a huge impact on the economy," it added.
This month, the Southeast Asian archipelago, home to nearly 270 million people, said it was rolling out a "new normal" policy that included gradually easing movement restrictions in a bid to head off economic collapse.
But Indonesia's infections are mounting with cases topping 40,000 on Wednesday, surging beyond neighboring Singapore to mark the region's highest.
The country has also recorded 2,276 deaths. But with one of the world's lowest testing rates, the true scale of the public health crisis is widely believed to be much bigger.
Agence France-Presse
WELLINGTON - Prime Minister Jacinda Ardern on Wednesday raised the prospect of Kiwis enjoying extra public holidays and a shorter working week to help kickstart New Zealand's post-lockdown economy.
Ardern said she wanted to encourage "nimble" and creative ideas for recovery after a strict seven-week lockdown that helped New Zealand contain COVID-19 but stalled the economy.
Suggestions included moving to a four-day week and creating extra public holidays to help boost spending in the tourism and hospitality sectors that have been hit particularly hard by the lockdown.
"This is an extraordinary time and we should be willing to consider extraordinary ideas," she told reporters, adding: "I haven't ruled anything in or out."
Ardern said there is "a range of options and we should be open (minded)".
After talking to tourism industry representatives on Tuesday, the prime minister said working from home during lockdown had shown how productive employees could be if given extra flexibility.
She said a four-day week could work the same way if employers were willing to try it.
"Think about if that's something that would work for your workplace, because it certainly would help tourism all around the country," she said.
New Zealand, with a population of five million, has recorded just 21 coronavirus deaths, thanks largely to the early lockdown and rigorous adherence to anti-virus measures.
International borders remain closed but New Zealanders are now free to travel domestically, with tourism operators and airlines ramping up services to meet demand.
Agence France-Presse
