Saudi Aramco reported on Tuesday a net income of US$16.66 billion for the first quarter of 2020, down from net earnings of US$22.2 billion for Q1 2019, due to the coronavirus pandemic and the oil price crash that Saudi Arabia itself helped to worsen with the oil price war in March.

Despite the profit slump of US$6 billion in Q1, Aramco’s free cash flow was more resilient and fell to US$15 billion from US$17.4 billion in Q1 2019.

“The first quarter of 2020 was impacted by declining global crude oil demand resulting from COVID-19 and its impact on worldwide economic activity. This led to lower crude oil prices and continued pressure on refining and chemicals margins,” Saudi Arabia’s oil giant said in a statement.

Despite the slump in profits, Aramco is on track to pay dividends worth US$75 billion for the year, considering the Q1 dividend payout, but some analysts believe that Aramco could reduce the dividend to the Saudi government in the coming quarters if the low oil prices persist.

In Q1, Saudi Aramco paid US$13.4 billion in dividends for the fourth quarter of 2019, and will pay dividends of US$18.75 billion for the first quarter of 2020, the company said, noting that these would be “the highest of any listed company worldwide and will be paid in the second quarter.”

Yousef Husseini, an analyst with EFG Hermes, told Reuters that Aramco could reduce the dividend to its biggest shareholder, the Kingdom of Saudi Arabia, in the second quarter, although there were no changes in the dividend policy and payout for the first quarter of the year.

 

“While COVID-19 has created unprecedented uncertainty, we have considerable experience in managing through times of adversity,” Saudi Aramco President and CEO Amin Nasser said, commenting on the Q1 performance.

Aramco’s Q1 earnings report comes a day after the world’s top oil exporter pledged to cut oil production by an additional 1 million barrels per day (bpd) on top of its promised cuts as part of the OPEC+ production cut deal, and a day after Saudi Arabia announced ‘tough’ economic austerity measures as its oil revenues—the key source of budget income—plunged with the collapse in oil prices.