Saudi Aramco, an energy giant on Tuesday reported its first quarter results which are less than 25 per cent of the profit in comparison to last year. The fall in the earnings are reflected mainly by the decline in crude oil prices as the coronavirus will diminish the demand and affect its full year earnings.
One of the world’s largest listed firm posted a net profit of $16.66 billion in the first quarter irrespective of $22.2 billion in the former year. The company said COVID-19 crisis is unlike anything the world has ever experienced in recent centuries and claims that we are coping and adapting to highly flexible and dynamic business environment.
The main reason of the fall in company’s earnings is down fall of the crude oil prices which hampered the economic demand as the margins shrunk for the chemicals and refining businesses.
A steep decline in global demand for energy caused by the crisis would affect its full year results. Saudi Aramco To remain confident as the global economies recover gradually so will the demand for energy. The company is planning to cut down on capital spending.
The company has faced a torrid environment since the historic $29.4 million initial public offering which is world’s largest offer till now.
Prices were also affected during the price war between Russia and Saudi Arabia as the major producers scrambled to secure the market share.
Due to the coronavirus pandemic, oil prices have fallen to nearly two decade lows in March, lost almost two-thirds of their value due to negligible demand.