Aramco reports lower net income in 1Q 2024

Saudi state oil giant Aramco’s net income fell 14.4% y-o-y to SAR 102.3 bn (USD 27.3 bn) in 1Q 2024, it said in an earnings release (pdf) yesterday. The company’s revenues during the quarter dipped 3.7% y-o-y to SAR 402.0 bn (USD 107.2 bn), which it attributed to lower crude oil sales and falling refining and chemicals margins. The lower income was, however, “partially offset by lower production royalties and an increase in crude oil prices,” the company said.

Dividends are staying the same: The oil giant will pay out SAR 76.1 bn (USD 20.3 bn) in base dividends on its 1Q 2024 earnings, as well as SAR 40.5 bn (USD 10.8 bn) as a performance-linked dividend, which will be paid out in 2Q 2024, it said in a disclosure to Tadawul. The company said it expects to pay SAR 466.2 bn (USD 124.3 bn) in dividends in 2024, including SAR 161.7 bn (USD 43.1) bn that will be performance-linked.

ALSO FROM KSA-

Saudi’s tilt fully toward Silicon Valley looks nearly complete as Bloomberg reports this morning that Alat, the PIF’s advanced technologies platform, would divest from China if it were asked to do so by the United States. The UAE’s G42 has already offloaded all its stakes in Chinese businesses in a bid to reportedly appease US partners, including a USD 100 mn stake in TikTok parent company ByteDance.

“So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” the business information service quotes Amit Midha, CEO of the USD 100 bn platform, as saying.

Two partnerships with US companies are now in the pipeline, Midha said, and could be announced by the end of the year. “The US is the number one partner for us and the number one market for AI, chips and semiconductor industry,” he said.

AND- The Biden administration has told Intel and Qualcomm to stop selling chips to Huawei that the Chinese company needs for its phones and laptops, the Financial Times reports. in an exclusive.

IN CONTEXT- The US has been on a years-long drive to contain China’s emergence as a significant technology rival. Officials in DC are asking Riyadh to agree to limit the use of some Chinese technologies as part of a pact on AI and advanced tech that the two sides hope to sign. They’re simultaneously negotiating agreements on defense and nuclear power as part of a wider process that Washington hopes will see us normalize relations with Israel.

It’s going to be a delicate balancing act: Riyadh and Beijing have been on a drive to build deeper ties. China is a critical crude oil market for Aramco, which is looking to invest more in Chinese refining capacity and petchems. The first China-based ETF of Saudi shares started trading late last year, Tadawul will host tomorrow the Hong Kong edition of its flagship capital markets conference. Gigaprojects are in play, too: Neom was on the road in China a few weeks ago and it’s courting Chinese bankers to help finance work there.

THE MARKETS THIS MORNING-

Asian markets are mixed this morning as investors sift through earnings reports, CNBC reports, while US stock futures are largely unchanged after the Dow yesterday hit its longest stint in the green since December. European equities futures were also little changed in overnight trading.

THE CLOSING BELL-

The DFM stayed flat yesterday on turnover of AED 262.9 mn. The index is up 2.4% YTD.

In the green: Dubai Islamic Ins. and Reins. (+3.5%), Tabreed (+3.4%) and Ithmaar Holding (+3.2%).

In the red: Al Salam Sudan (-8.4%), ENBD REIT (-2.3%) and Salik Company (-1.4%).

Over on the ADX, the index rose 0.4% on turnover of AED 1 bn, while Nasdaq Dubai closed up 0.3%.