Friday, 29 March 2024

Would rise 112% by 2021 end, exceeding in 2022

Aramco’s Profits Surpass Projections -Al-Rajhi Capital

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Aramco’s earnings of SR114 billion, achieved by the end of Q3-2021, were above its projections of SR104 billion, with the company’s profits predicted to reach SR392 billion by the end of 2021, a growth of 112%. Profits were SR185 billion in 2020, and are expected to reach SR411 billion by the end of 2022, according to Al-Rajhi Capital.

Al-Rajhi Capital, on the other hand, recommended neutrality towards the Saudi Aramco stock, raising the target price to SR37 from SR35 previously, stating that “we are still positive about Aramco, given its ability to maintain dividends, capital investment, and a strong budget,” adding that “we are still positive about Aramco, given its ability to maintain dividends, capital investment, and a strong budget”.

اقرأ المزيد

While revenue for the third quarter was mainly in line with forecasts, earnings exceeded them, owing to high refining and chemical margins and lower-than-expected operating costs. (SR28.7 billion (+27% GOG), more than enough to fund quarterly dividend payments of SR18.76 billion and capital expenditures of SR7.6 billion. 

This also assisted the corporation in lowering its gearing ratio to 17.2%. (In comparison, 19.4% in Q2-2021; target: 5-15%)

Al-Rajhi Capital expects Aramco to continue to generate strong cash flows, thanks to stable oil prices amid strong oil demand and ongoing supply constraints from OPEC+, a gradual increase in production in accordance with the agreed-upon production quota, healthy margins, and improved efficiencies/synergies. Higher cash flows also help to fund capital investment plans (such as raising maximum capacity to 13 million b/d from 12 million b/d) and pay down debt.

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