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NEW DELHI: Saudi Aramco, which is buying 20 per cent in the oil and petrochemicals business of Reliance Industries, has emerged as the world’s most profitable company with a staggering bottomline of $111 billion last year, surpassing the combined profits of giants like Apple, ExxonMobil and Royal Dutch Shell.
The state-owned company’s massive oil production makes Saudi Arabia the kingpin of the Organisation of Petroleum Exporting Countries.
The company is on an acquisition spree, buying stakes in refineries, to give the world’s largest crude oil exporter assured markets when concerns of pollution and the shift to clean energy is raising concerns about falling oil demand in the medium to long term.
On Monday, when Mukesh Ambani announced the stake sale, Saudi Aramco said its net profit in the first half of 2019 rose to $46.9 billion, slightly lower than $53 billion a year ago, because of lower oil prices.
It was still far ahead of the $31.5 billion reported by the world’s most profitable listed company Apple.
“Leveraging our strength in upstream, we continued to deliver on our downstream growth strategy, including acquisitions in both Saudi Arabia and key international markets.
These acquisitions are expected to enhance dedicated crude placement, increase refining and chemicals capacity, capture value from integration and diversify our operations,” Saudi Aramco president and chief executive Amin H Nasser said in a statement.
Aramco, which pumps about 9.6 million barrels per day (bpd) of crude oil, will supply 500,000 bpd to RIL’s 1.24-million-bpd Refining complex at Jamnagar.
The company is planning a giant IPO, aiming to mop up $100 billion for a 5 per cent stake, valuing the company at $2 trillion, which is comparable with India’s gross domestic product and the total market capitalisation of the Bombay Stock Exchange last year.
Aramco’s diversification is part of Crown Prince Mohammed bin Salman’s plan to diversify the kingdom’s economy to reduce its excessive dependence on crude oil production.
Aramco has been on a mission to acquire refining stakes for decades, starting with 35 per cent in a Korean refinery.
It subsequently picked up stakes in refineries in Greece, China, Japan and the largest refinery in the US, but it had not made a foothold in India so far.
FIRST HALF YEAR RESULTSIt is the first time the company has published half-year financial results and comes after Aramco opened its secretive accounts for the first time in April as it prepares to raise funds from investors.
“Despite lower oil prices during the first half of 2019, we continued to deliver solid earnings and strong free cash flow underpinned by our consistent operational performance, cost management and fiscal discipline," Nasser was quoted as saying in a company statement.
Analysts say record demand for a $12-billion debut international bond launched this year has propelled the world's top oil exporter to speed up efforts to float the company.
But in its earnings call, the company gave no timeframe for the planned initial public offering.
Prince Mohammed has previously said the IPO -- which could potentially be the world's biggest stock sale -- would take place in late 2020 or early 2021.
Failure to reach a $2 trillion valuation as desired by Saudi rulers is widely considered the reason the IPO -- earlier scheduled for 2018 -- has been delayed.
But investors have long debated whether Aramco was really valued so much.
Saudi Arabia has not announced where the listing will be held, but London, New York and Hong Kong have all vied for a slice of the muchtouted IPO.
Stock Market
At $111 billion, Aramco made more profit than Apple, Exxon and Shell put together last year
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