Saudi Arabia’s state-run oil giant, Aramco, has been revealed as the world’s most profitable company after divulging its finances for the first time.
Based on a prospectus for a massive bond offering, Moody’s ratings agency estimates the company made in excess of $111 billion last year. This is nearly double the $59.4 billion made by Apple, the world’s most profitable public company, and makes it more profitable than Apple, Amazon, and Alphabet combined.
Boosted by a 31% increase in average oil prices last year, CNN Business says “it is the first public disclosure of earnings by Aramco in the decades it has been owned by the Saudi government”.
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“The first official glimpse of Saudi Aramco’s financial performance confirms the state-run oil giant can generate profit like no other company on Earth”, says Bloomberg, but accounts published before the firm’s debut in the international bond market also show Aramco “doesn’t generate as much cash per barrel as other leading oil companies like Royal Dutch Shell Plc because of a heavy tax burden”.
Despite the huge profit, the state-owned oil giant was rated by credit agencies below its main rivals and on par with Saudi Arabia, “meaning the kingdom’s sluggish economy will weigh on Aramco’s cost of borrowing as it prepares its bond market debut”, reports Reuters.
The bond sale, being pitched to investors this week in a global roadshow, “has forced Aramco to reveal secrets held close since the company’s nationalisation in the late 1970s, casting a light on the relationship between the kingdom and its most important asset”, says Bloomberg.
It gives some idea about the kingdom of Saudi Arabia’s overall revenue. Based on 2017 tax figures, Fitch estimates that Aramco “accounted for around 70% of the country's budget revenue proceeds”, leaving Saudi Arabia with an annual budget revenue of about $143 billion.
“It’s part of a transparency push on behalf of Saudi Arabia as part of a will-they-won't-they over the company's IPO plans which it shelved last year”, says Business Insider.
Saudi Arabia is attempting to transition its economy away from hydrocarbons in order to diversify its oil-heavy economy and attract new capital to the Kingdom.
Yet plans to put 5% of Aramco up for sale last year were eventually shelved after concerns about volatile oil prices, heightened public scrutiny and pressure from hardliners in the government.
