The World’s 20 Most Profitable Companies

The biggest chunk of the earnings pie is increasingly split by fewer and fewer companies.

In the U.S. for example, about 50% of all profit generated by public companies goes to just 30 companies — back in 1975, it took 109 companies to accomplish the same feat:

This power-law dynamic also manifests itself at a global level — and perhaps it’s little surprise that the world’s most profitable companies generate mind-bending returns that would make any accountant blush.

Which Company Makes the Most Per Day?

Today’s infographic comes to us from HowMuch.net, and it uses data from Fortune to illustrate how much profit top global companies actually rake in on a daily basis.

The 20 most profitable companies in the world are listed below in order, and we’ve also broken the same data down per second:

The Saudi Arabian Oil Company, known to most as Saudi Aramco, is by far the world’s most profitable company, raking in a stunning $304 million of profits every day. When translated to a more micro scale, that works out to $3,519 per second.

You’ve likely seen Saudi Aramco in the news lately, though for other reasons.

The giant state-owned company has been rearing to go public at an aggressive $2 trillion valuation, but it’s since delayed that IPO multiple times, most recently stating the listing will take place in December 2019 or January 2020. Company-owned refineries were also the subject of drone attacks last month, which took offline 5.7 million bpd of oil production temporarily.

Despite these challenges, Saudi Aramco still stands pretty tall — after all, such blows are softened when you churn out the same amount of profit as Apple, Alphabet, and Facebook combined.

Numbers on an Annual Basis

Bringing in over $300 million per day of profit is pretty hard to comprehend, but the numbers are even more unfathomable when they are annualized.

On an annual basis, Saudi Aramco is raking in $111 billion of profit per year, and that’s with oil prices sitting in the $50-$70 per barrel range.

To put this number in perspective, take a look at Chevron. The American oil giant is one of the 20 biggest companies on the S&P 500, but it generated just $15 billion in profit in 2018 and currently sits at a $221 billion market capitalization.

That puts Chevron’s profits at roughly 10% of Aramco’s — and if Aramco does IPO at a $2 trillion valuation, that would put Chevron at roughly 10% of its market cap, as well.

The World’s Most Powerful Reserve Currencies

When we think of network effects, we’re usually thinking of them in the context of technology and Metcalfe’s Law.

Metcalfe’s Law states that the more users that a network has, the more valuable it is to those users. It’s a powerful idea that is exploited by companies like LinkedIn, Airbnb, or Uber — all companies that provide a more beneficial service as their networks gain more nodes.

But network effects don’t apply just to technology and related fields.

In the financial sector, for example, stock exchanges grow in utility when they have more buyers, sellers, and volume. Likewise, in international finance, a currency can become increasingly entrenched when it’s accepted, used, and trusted all over the world.

What’s a Reserve Currency?

Today’s visualization comes to us from HowMuch.net, and it breaks down foreign reserves held by countries — but what is a reserve currency, anyways?

In essence, reserve currencies (i.e. U.S. dollar, pound sterling, euro, etc.) are held on to by central banks for the following major reasons:

• To maintain a stable exchange rate for the domestic currency
• To ensure liquidity in the case of an economic or political crisis
• To provide confidence to international buyers and foreign investors
• To fulfill international obligations, such as paying down debt
• To diversify central bank portfolios, reducing overall risk

Not surprisingly, central banks benefit the most from stockpiling widely-held reserve currencies such as the U.S. dollar or the euro.

Because these currencies are accepted almost everywhere, they provide third-parties with extra confidence and perceived liquidity. This is a network effect that snowballs from the growing use of a particular reserve currency over others.

Reserve Currencies Over Time

Here is how the usage of reserve currencies has evolved over the last 15 years:

Over this timeframe, there have been small ups and downs in most reserve currencies.

Today, the U.S. dollar is the world’s most powerful reserve currency, making up over 61% of foreign reserves. The dollar gets an extensive network effect from its use abroad, and this translates into several advantages for the multi-trillion dollar U.S. economy.

The euro, yen, and pound sterling are the other mainstay reserve currencies, adding up to roughly 30% of foreign reserves.

Finally, the most peculiar data series above is “Other”, which grew from 2.0% to 8.4% of worldwide foreign reserves over the last 15 years. This bucket includes the Canadian dollar, the Australian dollar, the Swiss franc, and the Chinese renminbi.

Accepted Everywhere?

There have been rumblings in the media for decades now about the rise of the Chinese renminbi as a potential new challenger on the reserve currency front.

While there are still big structural problems that will prevent this from happening as fast as some may expect, the currency is still on the rise internationally.

What will the composition of global foreign reserves look like in another 15 years?