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Bloomberg: Aramco is the most profitable company in the world

UNITED STATES (OBSERVATORY) –┬áThe net profit of Saudi Arabian State Oil Company Saudi Arabian Oil Co. In the first six months of 2017 it was $ 33.8 billion. Thus, Saudi Aramco is the most profitable company in the world, easily ahead of such American giants as Apple Inc., JPMorgan Chase & Co. and Exxon Mobil Corp., writes Bloomberg.

For four decades, Saudi Aramco’s financial performance was one of the biggest mysteries in the global business. The data published by Bloomberg News provides the largest opportunities for today to assess the value of the company that is preparing to conduct an IPO. In addition, since Aramco provides the bulk of Saudi Arabia’s revenues, the financial results of the oil giant give investors an understanding of the financial state of the kingdom.

However, the company told the agency: “This is inaccurate, Saudi Aramco does not comment on speculation about its financial performance and fiscal regime.”

As the agency notes, the company is almost completely free of debts and has a production cost lower than the industry standard.

Financial indicators prepared in accordance with the IFRS standard reflect the company’s sensitivity to oil prices. The net profit of Aramco was $ 7.2 billion in the first half of 2016, when oil traded an average of $ 41 per barrel. This year, the profit is likely to be much larger than in the past, thanks to higher oil prices.

Bloomberg’s calculations on the basis of the available data show that the adjusted cash flow from operating activities of Aramco was $ 52.1 billion in the first half of last year, when the price of Brent crude averaged $ 53 per barrel. For comparison: the cash flow from Shell’s operating activities for the same period was about $ 21 billion.

In the first half of 2017, Aramco paid the government $ 13 billion in dividends. Exxon paid dividends to shareholders of $ 6.4 billion, Royal Dutch Shell Plc – $ 7.8 billion, although the two companies together produce less oil than Aramco.

Generation of cash is limited due to taxes. Aramco pays a 50% tax on profits and additionally royalties, the size of which is tied to oil prices.

Until January 2017, the company paid royalties in the amount of 20% of the proceeds from the export of crude oil and petroleum products (about 7 million barrels per day). Now Aramco pays royalties from all petroleum liquids (more than 10 million barrels). At an oil price below $ 70 per barrel, the rate is 20% of revenue, with a price in the range of $ 70 to $ 100 per barrel, the rate rises to 40%. At a price of oil above $ 100 per barrel, the rate reaches 50%.

Saudi Aramco plans to sell up to 5% of the shares during the IPO, which is expected to become the largest in history.

The placement is part of Visions-2030, the plan of Crown Prince Mohammed bin Salman to diversify the economy, create the world’s largest sovereign investment fund and reduce dependence on hydrocarbons.

The Crown Prince of Saudi Arabia expects to raise a record $ 100 billion within the IPO. This means that the company’s value would have been estimated at $ 2 trillion.