The world’s largest oil company, Saudi Aramco, has reported a staggering $31.88 billion in profits for the first quarter of 2023, overshadowing the combined profits of tech giants Google, Meta, Nvidia, Amazon, and Tesla. Although not as frequently featured in mainstream media, Aramco is the third-largest company globally, following closely behind Apple and Microsoft.
Key Points
- Saudi Aramco reports $31.88 billion in Q1 profits, outperforming major tech companies combined
- Profits fell 19% YoY, but the company remains a significant global player
- Rising oil prices could further boost Aramco’s revenues
A Closer Look at the Numbers
Despite a 19% YoY decline, the $2.1 trillion-valued Aramco recorded an impressive $31.88 billion in profits for the first three months of 2023. In 2022, the company posted record profits of $161 billion, a 46% increase from the previous year, and the highest for any publicly listed company.
A Closer Look at the Record-Breaking Q1 Profits:
Google: $15.0 billion
Meta: $5.7 billion
NVIDIA: $1.4 billion
Amazon: $3.2 billion
Tesla: $2.5 billion
The Institute of International Finance estimates that Saudi Arabia stands to gain an additional $40 billion annually for every $10 increase in the price of a barrel of oil.
Ownership and Dividends: Saudi Aramco’s Government Ties
Saudi Aramco is majority-owned by the Saudi Arabian government, which holds 90% of the company’s stock. The company’s dividend payments are essential for financing the state.
In addition, Aramco plans to introduce a supplementary dividend, potentially raising the Saudi Arabian government’s payouts by billions of dollars. This new dividend will amount to 50%-70% of the company’s annual free cash flow. For this quarter, the free cash flow stands at $30.9 billion, while last year’s figure was nearly $150 billion.
Oil and the Energy Transition: Aramco’s Strategic Advantage
Ironically, fossil fuels, including oil, will play a critical role in the global energy transition. This gives the Middle East a significant advantage, as years of underinvestment in mining could easily push oil prices above triple digits in the coming years, despite the recent dip in prices due to recessionary concerns.
This challenging transition may pose difficulties for those who do not control the supply, giving Aramco an even more dominant position in the market.
In conclusion, Saudi Aramco’s Q1 profits of $31.88 billion surpass the combined profits of Google, Meta, Nvidia, Amazon, and Tesla, solidifying the company’s position as a powerhouse in the global market. As oil prices continue to rise, Aramco’s revenues are set to increase even further, making it a veritable money-printing machine.
Don’t miss out on our previous article that sheds light on the surprising April figures of U.S. inflation, which turned out to be lower than anticipated. Gain valuable insights into the factors contributing to this unexpected trend and its potential implications for the economy.
