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Saudi Aramco now the most profitable company in the world, say credit agencies

Credit rating agencies Fitch and Moody made their first-ever assessment of Aramco after gaining access to the company's accounts
Moody's said that Aramco posted a net profit of $111.11 billion in 2018 and generated revenue of $359.9 billion - making a higher profit than the five major western oil companies combined (AFP)

Saudi Aramco, the state-owned oil company by Saudi Arabia, is now the most profitable company in the world, surpassing Apple's profits of about $60 billion, according to credit agencies who gained access to the company's secretive account.

Credit rating agencies Fitch and Moody both made a first-ever assessment of Aramco in a bond prospectus handed to investors after they gained access to the company's accounts. 

The assessment comes as Aramco prepares to sell bonds to help fundraise the purchase of a 70 percent stake in Saudi petrochemical company SABIC for $69.1 billion, in a bid to merge the two largest companies inside Saudi Arabia.

Moody's Investor services said that Aramco posted a net profit of $111.11 billion in 2018 and generated revenue of $359.9 billion - making a higher profit than the five big oil companies combined. 

Fitch Ratings said Aramco reported $224 billion in earnings before tax and depreciation while maintaining low debt levels.

Fitch and Moody's, however, gave Aramco a credit rating of just A+ and A1 respectively, due to the company spending the majority of its revenue on the Kingdom's increasing government budget.

The highest credit rating possible from both agencies is AAA.

"Saudi Aramco has many characteristics of an AAA-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world's largest hydrocarbon reserves," said Rehan Akbar, vice president at Moody's. 

Fitch also added that Aramco had the potential to be an AA+ company, similar to other oil companies, because of its finances, hydrocarbon reserves, and low production costs. 

Last year, US oil giants Chevron and Exxon Mobil, Britain's BP, Anglo-Dutch rival Royal Dutch Shell and France's Total together posted nearly $80 billion.

Boost for Vision 2030

The SABIC deal follows long delays in a proposed sale of Aramco shares to raise $100 billion to fund Saudi Crown Prince Mohammed bin Salman's Vision 2030 plan to help diversify the kingdom's oil-dependent economy. 

The SABIC deal will give the Public Investment Fund (PIF), one of the kingdom's sovereign wealth funds, much-needed cash to carry out Vision 2030.

The PIF, which aims to control more than $2 trillion by 2030, is leading efforts to transform the petro-state to a tech-focused economy.

The fund has major global investments including a stake in the ride-hailing app Uber.

Moody's said that considering Aramco has a substantial cash flow generation capacity, it can fund the SABIC deal without the need to borrow.