Saudi Aramco to buy Reliance stake, reports 12pc earnings slide
DUBAI: Saudi Aramco reported a 12 per cent fall in half-year net profit on Monday, yet remained the world’s most profitable company, while India’s Reliance Industries said Aramco is looking to buy into its refining and petrochemicals business.
Aramco signed a letter of intent to take a 20 per cent stake in Reliance’s oil-to-chemicals business in one of the largest ever foreign investments in India, Reliance announced.
Aramco, which declined to comment on the Indian deal, reported a net profit to $46.9 billion.
By comparison, Apple Inc, the world’s most profitable listed company, made $31.5 billion, US rival Exxon Mobil Corp around $5.5 billion and Royal Dutch Shell some $8.8 billion.
“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 an fiscal discipline,” CEO Amin Nasser said in a statement.
The company generated total half-year revenue, including other income related to sales, of $163.88 billion, down from $167.68 billion a year earlier. Free cash flow rose 6.7 per cent to $38 billion.
Aramco said the drop in earnings was mainly due to a 4 per cent fall in the average realised price of crude oil to $66 from $69 per barrel and an increase in purchases, producing and manufacturing costs, and depreciation and amortisation costs. The drop was partially offset by a decrease of $2.62 billion in income taxes, the company said.
Aramco is expanding in refining at home as well as in new markets, particularly in Asia.
It plans to raise its refining capacity — inside Saudi Arabia and abroad — to 8-10 million barrels per day, from around 5 million bpd now.