Saudi's huge secretive oil company unveils earnings amid IPO talk reignition

Saudi Aramco may have just reported a 12% slide in profit in its first half results statement but it still makes more money than any other company in the world.

The oil price has fallen to around $58 per barrel (CL=F; BZ=F), down from $69 to $66 per barrel in the same period in 2018. The energy titan says this is a key reason for why net income has dropped 4%, to $46.9bn (£38.8bn).

Reduced oil prices and oil production were also the reasons why Aramco’s total revenues fell to $163.88bn, from $167.68bn a year earlier.

The move by Saudi Arabia’s state oil producer to declare its results publicly is seen as rare, as it is notoriously private when it comes to the group’s financials. Monday marks the first time it will host an earnings call.

Aramco’s earnings have come under greater scrutiny over the last three years, after Prince Mohammed bin Salman said in 2016 that he had hoped to float about 5% of Aramco via a local and international listing, with a company valuation of at least $2 trillion.

After a race between mainly New York, London, and Hong Kong over who will snap up the $100bn slice of the pie, with the deal generating potentially $1bn in fees, the IPO has posed some serious questions over company transparency and realistic valuations.

After initially wanting to launch an IPO in 2019, Aramco CEO Amin Nasser said in January this year that Aramco would be ready to float by 2021.

Now, the rare financial disclosure comes at a time when there is renewed interest in a potential IPO.

Despite the oil price hitting its profits, what the results did show was that it still makes more money than any other company in the world. As a point of comparison, tech giant Apple (AAPL) raked in $31.5bn in the first half of this year versus Aramco which made $46.9bn during the same period.

“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,” said Nasser in a statement.

“Disclosing our financial results for the first time, as part of our $12bn debut international bond issuance, marked a significant milestone in Saudi Aramco’s history. We demonstrated our reliability with near 100% delivery on our customers’ requirements for oil and refined products, maintaining our total hydrocarbon production of 13.2 million barrels of oil equivalent per day and an average daily crude production of 10 million barrels per day.”