Saudi Aramco to pay $31 billion in dividends despite profit drop

Saudi Arabian state-owned company Aramco (ARMCO) announced a hefty $31 billion dividend payout for the second quarter of 2024, despite a decline in net income.

The company reported net income of $56.34 billion in the first half of 2024, down from $61.96 billion in the first half of 2023. Net income in the second quarter fell to $29.07 billion from USD 30.08 billion in the same quarter last year.

The second quarter dividend payment includes a base dividend of $20.3 billion and a performance-based dividend of $10.8 billion.

The oil giant (ARMCO) expects to pay a total of $124.2 billion in dividends in 2024, including $81.2 billion in base dividends and $43.1 billion in performance-based dividends. That amount exceeds Aramco’s (ARMCO) record profit of $121.3 billion in 2023.

Paying dividends is crucial for the Saudi government, which owns an 82% stake in Aramco (ARMCO), especially as the kingdom grapples with a budget deficit.

The Saudi government has adjusted its plans, including scaling back some projects under its Vision 2030 initiative. This includes putting on hold an expansion plan to increase Aramco’s (ARMCO) production capacity from 12 million barrels per day (mbpd) to 13 mbpd, which is expected to save $40 billion in capital investment over the next few years.