There are no companies in the world that can create a "huge profit" as the oil giant – Saudi Aramco from Saudi Arabia. The company recorded net income of 2018 of $ 111.1 billion, not difficult to "exceed" Silicon Valley's "big guys" like Apple or Exxon Mobil.
However, according to the statement published before the company issued international bonds, Aramco – producing around 10% of the world's crude oil, does not produce as much cash on each barrel as companies. other major oil due to tax pressure.
This week, Aramco will be hosting a bond issuance road show. This led to the company revealing the secret that had been hidden since nationalization in the late 1970s. The movement also showed a close relationship with the kingdom and the most important properties. of them. Fitch Ratings and Moody's were Aramco's fifth site, equating to the debt guaranteed by Saudi's government, but lower than Exxon, Shell and Chevron.
Aramco's "huge profit" is equal to Apple, Google and Exxon with each other.
At present, Aramco is preparing to stimulate capital to support majority procurement at Sabic Petrochemical Group, worth around $ 69 billion. The agreement is "plan B" to generate money for Saudi's economic agenda, postponed Aramco IPO. In fact, Prince Mohammed bin Salman uses the company's balance sheet to "pour" money into his ambition.
The prospect of publishing a 470 page bond issue, which was presented to the London Stock Exchange, not only shows that this is the richest company on the planet but also reveals Aramco's dependence on high oil prices. and how natural gas is. In 2016, when the price of Brent oil fell to an average of USD 45 / barrel and output was broken by OPEC, the company was struggling to break even. The net income for that year was only $ 13 billion and the free cash flow was $ 2 billion.
The big profit is, but the company has to "drop" a lot of money for the kingdom.
The cash flow of Aramco faces huge pressures from the dependence of the kingdom on them. They are companies that pay for Saudi, social and social spending, as well as the luxury lifestyle of hundreds of princes. Aramco pays 50% of its profits for income taxes, from 20% of revenue to 50% of oil prices for royalties t
Aramco said that cash flow from operating activities was US $ 121 billion, US $ 35.1 billion in fixed asset costs and paid US $ 58.2 billion in dividends to the government in 2018, according to Moody's. In a speech to prospective bond holders, the company said last year it had paid $ 52 billion in cash dividends.
Fitch said their A + grade for Aramco, reflecting the "strong relationship" between the company and the kingdom, and the influence of Saudi government to Aramco by regulating output, taxes and dividends. A + Aramco grade is one level lower than AA-Shell and Total. A Moody's grade for Aramco is behind Exxon's Aaa.
According to Bloomberg, Aramco will hold meetings with investors in the coming days in London, New York, Boston, Singapore, Hong Kong, Tokyo, Los Angeles and Chicago. JPMorgan, Morgan Stanley will be the publisher of underwriting bonds for this company.