Updates with dividends, background from paragraph 4

DUBAI, May 11 (Reuters) - Saudi oil giant Aramco 2222.SE reported a 4.6% drop in first-quarter profit on Sunday due to lower sales and higher operating costs.

The world's top oil exporter reported net profit of 97.54 billion riyals ($26.01 billion) in the three months ended March 31.

That beat a company-provided median estimate from 16 analysts of $25.36 billion.

Aramco confirmed a previously outlined $21.36 billion in total dividends for the first quarter, $219 million of which was performance-linked dividends, a mechanism introduced after a windfall from oil prices in 2022 following Russia's invasion of Ukraine.

Aramco had said in March it expected to declare total dividends of $85.4 billion in 2025, down sharply from last year's payout of over $124 billion, which was based on 2023 and 2024 earnings. The performance-linked payout, which last year totalled $43.1 billion, was slashed roughly 98% as free cash flow dried up.

Free cash flow was $19.2 billion in the first quarter, down 15.8% from a year ago.

"Global trade dynamics affected energy markets in the first quarter of 2025, with economic uncertainty impacting oil prices," Chief Executive Amin Nasser said in a statement, adding Aramco's results showed the value of its low-cost operations.

"Such periods also highlight the importance of disciplined capital planning and execution while we continue to take a long-term view. In volatile times Aramco’s resilience underpins both our financial performance and our sustainable and progressive base dividend."

Capital expenditure was just over $12.5 billion in the first quarter, up 15.9% from a year before.

($1 = 3.7507 riyals)

(Reporting by Yousef Saba and Federico Maccioni; Editing by Edmund Klamann and Elaine Hardcastle)

((Yousef.Saba@thomsonreuters.com; +971562166204; https://x.com/YousefSaba))