Saudi state-owned energy giant Aramco said Monday its first half net income for 2019 had slipped nearly 12 per cent to $46.9 billion, a first such disclosure for the secretive company ahead of its debut earnings call.
The fall in revenue — owing to lower oil prices — was reported amid renewed speculation the company was preparing for its much-delayed overseas stock listing, dubbed potentially the world’s biggest.
The news coincided with an announcement by India’s Reliance that it was selling a 20-per cent stake in its oil and chemicals business — worth $15 billion — to Aramco, a deal that would potentially boost the Saudi giant’s valuation ahead of an IPO.
Reporting its earnings, Aramco said in a statement: “The company’s net income was $46.9 billion for the first half (of) 2019, compared to $53.0 billion for the same period last year.”
It 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.
The company is slated to hold its first-ever earnings call later on Monday, giving investors a chance to discuss the results with Aramco’s management in another step towards greater transparency.
“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,” Aramco CEO Amin Nasser was quoted as saying in the 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 Monday’s statement made no mention of the planned initial public offering.
Crown Prince Mohammed bin Salman has previously said the IPO — which could potentially be the world’s biggest stock sale — would take place in late 2020 or early 2021.
– World’s biggest profit –
Saudi Arabia plans to sell up to five per cent of the world’s largest energy firm and hopes to raise up to $100 billion based on a $2 trillion valuation of the company.
But investors have long debated whether Aramco was really valued so much.
Failure to reach a $2 trillion valuation is widely considered the reason the IPO — earlier scheduled for 2018 — has been delayed.
But the stake acquisition in Reliance, which the Indian giant hailed as the “biggest foreign investment” in its history, could push Aramco closer to that goal as it diversifies its operations.
The planned IPO forms the cornerstone of a reform programme envisaged by Prince Mohammed to wean the Saudi economy off its reliance on oil.
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 much-touted IPO.
The petro-state has taken a number of key procedures in preparation for the IPO, including issuing a law for hydrocarbons tax, appointing a new board for Aramco and allowing an independent auditing of the kingdom’s oil reserves, the crown prince said in June.
Aramco has also opened its accounts books for the first time to international ratings agencies, declared the size of its profits and transformed into a public shareholding company, he added.
In April, Aramco revealed it made the world’s biggest corporate profit last year, opening its accounts for the first time.
Aramco posted a net profit of $111 billion in 2018 — far higher than the combined net earnings of the five international oil majors — and generated $356 billion in revenues.
Aramco also dethroned Apple as the world’s most profitable firm. Last year the US tech giant posted nearly $50 billion in net profits.