Aramco announces first buyback after announcing a drop in profit

Saudi Arabia's Aramco reported a 12% decline in annual profits due mainly to lower crude prices. However, it announced that up to $3 billion worth of shares would be repurchased in its first ever buyback.

The buyback will take place over the next 18-months. The company had relied until now on its huge dividend payouts as a way to reward investors.

The results are coming at a volatile time for global oil markets, as the U.S. and Israeli war against Iran has caused a 'near-closure of Strait of Hormuz. This has forced several producers in the region to reduce their output.

Brent crude, which soared to nearly $120 on Sunday, is currently trading at around $93 on Wednesday.

Aramco's?net profit for 2025 was $93.4 billion, which is below the LSEG consensus estimate $95.6 billion.

The net profit for the?fourth quarter fell 20.5%, to almost $17.8billion, due to higher operating costs. This is the 12th consecutive quarter that profits have declined year-over-year.

Aramco has confirmed that it will pay a $21.1 billion base dividend for the fourth quarter, and $219 millions in performance-linked bonuses. This mechanism is calculated on the basis of free cash flow introduced in 2022 after bumper profits following the Ukraine War.

The total dividends paid in 2018 were $85.5 billion. This is down from $124 billion in 2024.

Aramco is a long-time cash cow for the Saudi government, which relies on fossil energy for more than 50% of its revenues. The Saudi state directly owns nearly 81.5% and the Public Investment Fund holds the remaining 16%.

The total revenue for the year dropped 7.2%, to $415.8 Billion, due to lower prices of crude oil and refined products, as well as chemical products.

The gearing ratio of the?company - which is a measure for indebtedness - dropped from 4.5% to 3.8% by the end 2025. (Reporting and editing by Edwina G. Gibbs; Yousef S. Saba)

(source: Reuters)