Saudi Aramco is still the world’s most profitable company, it revealed today, despite a drop in revenue brought on by lower oil prices.
The formerly secretive Saudi oil giant said that pre-tax income had fallen during the first half of the year. The results were part of Aramco’s first half-year report.
Income before tax at the company fell to $92.5bn (£76.6bn) in the first half of 2019, down from $101.2bn a year earlier.
Net income fell to $46.9bn in the first six months of the year from $53.02bn in the same period in 2018.
Revenue fell slightly to $146.9bn from $148.8bn in the first half of 2018.
The firm had free cash flow of $37.98bn in the six months to 30 June, up from $35.6bn in the first half of the previous year.
It held oil production steady at 10 million barrels per day (mmbpd), the same amount as in 2018.
Why it’s interesting
Saudi Aramco’s first publicly released financial results come as the firm works towards an initial public offering (IPO) of its stock. It could be the biggest such issuance in history.
It was originally planned for this year but fluctuating oil prices, the death of Saudi journalist Jamal Khashoggi and debate over the valuation of the giant firm has held it back.
But as the world’s most profitable company, massively outstripping closest rival Apple, Aramco will make a giant splash when it finally decides to come to market.
Demand outstripped supply during its $12bn international bond debut earlier this year. Investors had placed more than $100bn in orders, a global record.
As it gears up to its IPO, Aramco has gone on an acquisition spree. In March it made a $69bn deal to buy a 70 per cent stake in a Saudi chemicals business. And just weeks later it took a 17 per cent stake in Korea’s Hyundai Oilbank for $1.25bn.
Today the company took another step, buying a 20 per cent stake in the oil to chemicals business of India’s Reliance Industries. The deal values the target at $75bn.
What Saudi Aramco said
President and chief executive Amin Nasser said: “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.”
“Looking ahead, we will maintain a prudent and flexible balance sheet. Our financials are strong and we will continue to invest for future growth.”