Saudi Aramco on Sunday said its second-quarter profits plunged a massive 73% due to sharply lower oil prices as the coronavirus crisis undercuts global demand.
But the company, recently dethroned by Apple as the world's most-valuable listed company, has fared better than several international energy giants, all reeling from a drop in oil demand since the start of the novel coronavirus pandemic.
Aramco posted a net profit of $6.6 billion for the three months to June 30, compared to $24.7 billion for the same period last year.
The results were in line with analysts' expectations and reflected a downbeat oil market as coronavirus-led economic shutdowns crush demand for crude.
"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 unrivaled financial and operational strength."
The world's top five oil firms -BP, Chevron, ExxonMobil, Royal Dutch Shell and Total – have reported combined losses of $53 billion for the second quarter.
Aramco's net profit for the first half of the year also slumped, by 50.5% to $23.2 billion, compared to $46.9 billion in the same period last year.
Nasser said Aramco's results reflected its "financial resilience" as he observed 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% 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."
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 that combined to severely impact oil income.
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 barrels per day.
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% of its shares.
US technology firm Apple last week replaced it as the world's most valuable company after its capitalization 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.
"Despite COVID-19 bringing the world to a standstill, Aramco kept going," he said.