Energy

Saudi Aramco’s Profit Halved in Two Years, Market Cap $210B Below Apple’s

Published

3 years ago

April 13, 2021

Even before the pandemic, the oil and gas industry was faced with slumping prices. However, with a record collapse in oil demand amid the lockdowns, the COVID-19 crisis has further shaken the market, causing massive revenue and market cap drops for even the largest oil companies.

According to data presented by Finaria.it, the net income of the world’s biggest oil producer and one of the largest publicly listed companies, Saudi Aramco, dropped to $49bn in 2020, a 55% plunge in two years.

The COVID-19 Crisis and Oil Price War Cut Profits by Almost $40B in a Year

In preparation for its IPO, which took place in December 2019, Saudi Aramco had published 2018 profits. With a net income of $111.1bn, Saudi Arabia’s state-run oil giant ranked as the most profitable publicly listed company in the world.

Global macroeconomic concerns like the US-China trade war and the oil overproduction set significant price drops even before the coronavirus outbreak. In 2019, the company reported a profit of $88.2bn, a 20% drop year-over-year.

However, a standoff between Russia and Saudi Arabia in the first months of 2020 sent prices even lower and caused a massive hit for Saudi Aramco’s profits.

After global oil demand plunged in March, Saudi Arabia proposed a cut in oil production, but Russia refused to cooperate. Saudi Arabia responded by increasing production and cutting prices. Shortly Russia followed by doing the same, causing an over 60% drop in crude oil prices at the beginning of 2020. Although OPEC and Russia agreed to cut oil production levels to stabilize prices a few weeks later, the COVID-19 crisis already hit.

In March, Saudi Aramco announced full-year figures for the second time since going public, and the results revealed huge financial losses. In 2020, Saudi Arabia’s state-run oil company reported a net income of $49bn, almost a $40bn drop in a year.

While Saudi Aramco was the most profitable publicly listed company globally in 2019, the current result puts the company behind Apple, which reported a net income of $57.4bn in 2020.

Saudi Aramco’s Market Cap $210B Below Apple’s

In December 2019, Saudi Arabia’s state-run oil giant completed its long-awaited IPO and hit a staggering $2 trillion valuation on the second day of trading, nearly one trillion higher than the world’s next-largest publicly listed companies Microsoft and Apple. The initial public offering was an essential part of Crown Prince Mohammed bin Salman’s Vision 2030 program to transform the Saudi economy.

However, Saudi Aramco’s stocks were outperformed by Apple in 2020. After plunging to $1.61trn in March last year, the market cap of the Dhahran-based company jumped to $2.15trn in September. By the end of the year, this figure slipped to $2.05trn. Statistics show that Saudi Aramco’s market cap floated around this value for the last three months and then dropped to $1.87trn in April after the company revealed the full-year results.

Although valued one trillion less than Saudi Aramco at the time of its IPO, the world’s largest tech company, Apple’s, has seen its market cap surge last year. In January 2020, the combined value of shares of the US tech giant stood close to $1.4trn. After plunging to $1.1trn in March, Apple’s market cap soared to over $2.3trn in December. Although this figure slipped to $2.08trn last week, it still represents almost a 90% increase in a year.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

Published

1 week ago

September 4, 2024

Samed Olukoya

Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

Energy

Dangote Refinery Begins Production of Petrol

Published

1 week ago

September 3, 2024

Samed Olukoya

Aliko Dangote has officially announced the commencement of petrol production at the Dangote Refinery.

During a press presentation on Tuesday, the billionaire thanked President Bola Ahmed Tinubu for enforcing the sale of crude oil in Naira and for the eventual actualization of the project.

“Today is a very special day, which I think Nigeria has not produced petrol, which is gasoline, for many years but I stand with you today,” Dangote said.

“I would like to salute the people of Nigeria and the government of President Ahmed Tinubu for creating the environment for us to thrive and also achieve this monumental task of giving energy to our people for growth, development and prosperity.”

Dangote presented the first sample of petrol to the press and noted that its color is white, like water, because that is the original color of genuine petrol.

He also addressed the issue of round-tripping in the oil industry, where false documentation leads to petrol shortages.

Dangote said the refinery’s operations, would facilitate a precise tracking of petrol consumption across Nigeria, offering a solution to this problem.

“As we have this refinery working, it will show the true consumption of Nigeria,” he said.

“We can track every single loaded trucks and we will try as much as possible to track the loaded trucks, we can tell you where they are.”

Dangote, while stressing on quality, said the petrol from his plant, meets global standards.

“You will not be having an engine issue which a lot of us were having. It won’t happen at all,” the businessman said.

“So the quality here will match that of quality anywhere in the world. We will make sure that nobody will beat us in terms of quality.”

According to Edwin, the Vice President of Dangote Industries Limited, the Nigerian National Petroleum Commission (NNPC) will become the sole buyer of products from Dangote Refinery as it begins production.

“We are currently testing the gasoline, and soon, it will start flowing into the tanks,” Edwin stated. He also noted, “If no one buys it locally, we will export it, just as we’ve been doing with our aviation jet fuel and diesel.”

Energy

NNPCL Hikes Fuel Price to N855 per Litre Amid $6 Billion Debt Crisis

Published

1 week ago

September 3, 2024

Samed Olukoya

The Nigerian National Petroleum Corporation Limited (NNPCL) has increased the pump price to N855 per litre following reports that the corporation owes $6 billion and is struggling to meet various financial obligations.

On Sunday, NNPCL announced that the financial challenges afflicting the corporation are the reason for the ongoing fuel scarcity.

The corporation attributed this to the disparity between the pump price and the landing cost.

President Bola Ahmed Tinubu had removed subsidies and floated the Nigerian Naira to ensure prices of commodities are determined by market forces.

While foreign investors and multilateral financial institutions like the International Monetary Fund (IMF) have lauded the policy, Nigerians and local experts have challenged its modalities.

Since the policy was announced on Monday, 29 May 2023, the Nigerian economy has not remained the same as the cost of living has skyrocketed while the inflation rate remains elevated at over 30%.

New job creation, on the other hand, has plunged to nearly zero, with household income and savings declining.

In March, the Manufacturing Association of Nigeria (MAN) said about 767 manufacturing companies had shut down operations while 335 experienced distress in 2023.

The association attributed this to economic challenges like high foreign exchange rates that made it impossible to import, rising inflation, and weak demand due to declining consumer spending.

This was evident in the Gross Domestic Product (GDP) report released for the second quarter of 2024.

The manufacturing sector’s contribution to the GDP declined by 20.95% to 12.68%, down from 16.04% recorded in the fourth quarter of 2023.