Arab News, Saturday, Jan 07, 2023 | Jamadi Al Thani 14, 1444
Saudi Aramco’s Q4 earnings likely to decline due to weak oil prices: Al Rajhi Capital
Saudi Arabia:
Energy giant Saudi Arabian Oil Co.’s net
profit in the fourth quarter of 2022 is expected to drop to SR146 billion ($38
billion), down 6.3 percent from the previous quarter, according to Al Rajhi
Capital.
In its report, the Riyadh-based firm noted that
the reduction in net profit is due to a weak demand outlook amid a global
economic slowdown.
According to the report, the decision to cut
output prices by the Organization of Petroleum Exporting Countries, and its
allies, known as OPEC+, coupled with weak oil prices, also negatively impacted
Saudi Aramco’s earnings in the fourth quarter.
The report, however, revealed that Aramco’s net
profit in the fourth quarter could still be up 25.4 percent year on year, with
the oil giant reporting a profit of SR116 billion in the final three months of
2021.
“Oil prices, despite the OPEC+ production cut
deal, declined by around 9 percent quarter on quarter in the fourth quarter,
largely impacted by a weak demand outlook amid the likely economic slowdown,”
said Al Rajhi Capital in the report.
In December, OPEC+ decided to roll over its
existing policy to cut output by 2 million barrels per day, which equals to
about 2 percent of world demand, from November until the end of 2023.
According to the report, the petrochemical sector
in Saudi Arabia is likely to continue witnessing pressure on earnings in the
fourth quarter, driven by weak product spreads amid lower product prices.
The report noted that the net profit of Saudi
Basic Industries Corp., known as SABIC, in the fourth quarter is estimated to be
down 64.9 percent year on year to SR1.7 billion.
Al Rajhi Capital added that the net profit of
Saudi International Petrochemical Co., known as Sipchem, will drop by 61.9
percent year on year to SR503 million.
However, Aldrees Petroleum and Transport Services
Co., another major player in the Kingdom’s energy sector, could report a net
profit of SR63 million, up 16.8 percent from the previous period last year, the
report added.
The analysis went on and said that the healthcare
sector had a promising fourth quarter.
“The fourth quarter is seasonally a strong quarter
for the healthcare sector. We estimate a topline growth of 11 percent year on
year and 8 percent quarter on quarter mainly led by low double-digit growth by
most of the hospital operators,” said Al Rajhi Capital in the report.