Aramco's $75 billion dividend survives biggest oil, earnings disruptions

 The world's biggest oil company has taken on more debt in the past 12 months to keep up the dividend in the face of dwindling cash flow, though its gearing remains below that of firms such as Royal Du

Saudi Aramco’s $75 billion dividends survived one of the biggest disruptions to oil markets in decades as the coronavirus pandemic and a price war sent crude prices tumbling.

Aramco will make the payout -- the largest of any listed company and almost all which goes to Saudi Arabia’s government -- for 2020 despite a slump in earnings and revenue. The dividend is a key source of cash for the kingdom, whose economy was hit after the virus hammered energy markets and shut down local businesses.

The world’s biggest oil company has taken on more debt in the past 12 months to keep up the dividend in the face of dwindling cash flow, though its gearing remains below that of firms such as Royal Dutch Shell Plc.

Net income for 2020 was 184 billion riyals ($49 billion), Aramco announced on Sunday. That was slightly better than analysts’ expectations and down 44% from the previous year. Free cash flow fell almost 40% to $49 billion, substantially below the level of the dividend.

Gearing, a measure of net debt to equity, climbed from minus 5% in March to 22% in September, above the firm’s target of no more than 15%. It rose marginally in the fourth quarter, according to Chief Financial Officer Khalid al-Dabbagh, though the company will release full numbers for the period on Monday.