World's most valuable company, Saudi Aramco, posted the biggest quarterly adjusted profit in May of any listed company globally driven by Russia's war in Ukraine and an increase in demand that resulted in rising crude prices.
The oil giant's net income rose to $48.4 billion in the second quarter, up from $25.5 billion a year earlier (90% year-on-year increase), the company announced on Sunday. Revenue soared 80% hitting $150 billion, and its free cash flow surged by 53% from a year earlier to $34.6 billion.
"While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential -- both to help ensure markets remain well supplied and to facilitate an orderly energy transition," said Aramco president and CEO Amin H. Nasser.
"In fact, we expect oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts."
The state-controlled company kept its quarterly dividend, a crucial source of revenue for the kingdom, unchanged at $18.8 billion. In addition, the company reduced gearing, a measure of debt to equity, to 7.9% from 14.2% at the end of 2021.
It's worth noting that the quarterly profits, the highest since Aramco's flotation in late 2019, beat analyst forecasts of $46.2 billion.
Aramco is not the only energy company that flourished in the first half of this year. Rivals such as Exxon Mobil Corp. and Shell Plc unveiled record earnings in the second quarter as well. The main reasons behind the surge in these companies' profits are the Russia's war in Ukraine, and the post-pandemic surge in demand.
Russia’s invasion of Ukraine disrupted the markets, sending oil prices above $100 a barrel and causing refining margins to surge. Demand, meanwhile, continued to rebound from the pandemic in most parts of the world.
Aramco listed 1.7 percent of its shares on the Saudi bourse in December 2019. Its shares have gained 25% this year, giving it a market valuation of $2.4 trillion.
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