Jeddah, KSA: Earlier today, Saudi Aramco Base Oil Company - Luberef reported its financial results for 2022, registering its highest profits in the company’s history. This exceptional performance was attributed to the improvement in crack margins by 10% and the increase in sales volumes by 6% over 2021, supported by high levels of operational reliability, safety and the positive impact of transformation programs in the refinery sector at Saudi Aramco.
Revenues increased to 10.614 billion Saudi riyals in 2022, compared to 8.847 billion Saudi riyals in 2021, due to higher crack margins for base oils and by-products. The company earned 2.511 billion Saudi riyals before interest, taxes, depreciation and amortization in 2022, a 20% increase over last year's 2.096 billion Saudi riyals.
The company's President and Chief Executive Officer, Eng. Tareq AlNuaim, said: “We are proud of the impressive results we achieved in 2022. Based on market studies, we expect an increase of 5 million metric tons in global demand for the second and third categories of base oils during the period from 2022 to 2030. Luberef has all the necessary ingredients for growth, and we are planning to benefit from this growth through future medium-term projects. We also expect continued growth in the short term, based on the sector-focused transformation initiatives and with the support of the second growth project in Yanbu."
Commenting on the level of demand and market prices during the first quarter of 2023, the CFO of Luberef Mr. Mohammed AlNafea said: “Predictions indicate a decrease in the crack margins for base oils in the first quarter, compared to the fourth quarter of the year 2022. This quarter's margins are higher than the average for the past 10 years and for the same quarter of 2021. In the short term, the economic recovery in China will have a significant impact on the demand for base oils from the country, which will significantly affect margins in the short term. However, crack margins in base oils are higher and more stable, compared to oil prices and the refining sector.”
Luberef’s 2022 operating profit amounted to 2.171 billion Saudi riyals, compared to 1.756 billion Saudi riyals in 2021, with a change rate of 24%, while the net profit amounted to 1.978 billion Saudi riyals in 2022, compared to 1.503 million Saudi riyals in 2021. Base oil crack margins increased by 10%, reaching 2.484 billion Saudi riyals, compared to 2.248 billion Saudi riyals in 2021.
By the end of 2022, the debt had fallen to 3% from 17% in 2021. This is less than the target range of 25% to 35% during the economic cycle. Therefore, the increase in interest rates did not have a significant impact on Luberef, which confirms the durability and strength of the company's financial position. While free cash flow amounted to 1.969 billion Saudi riyals, compared to 1.734 billion Saudi riyals in 2021, total shareholders’ equity increased by 20%, reaching 5.083 billion Saudi riyals. This is compared to 4.245 billion Saudi riyals in the same period.
In line with its commitment to maximizing returns for shareholders, Luberef announced the recommendation of the company's board of directors to distribute cash dividends to shareholders for the second half of the year 2022. The distribution of a 50% cash dividend, or 5 Saudi riyals per share, will amount to 841,285,750 Saudi riyals on 168,257,150 shares.
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About Luberef:
Established in 1976, Saudi Aramco Base Oil Company - Luberef is a listed Stock Company and is one of the world’s leading suppliers of high-quality Group I and Group II base oils. Luberef currently operates two refineries, first of which is in Jeddah and was commissioned in 1977. Our second refinery is located in Yanbu’s Industrial City and was commissioned in 1997. The current total production capacity of base oils from both refineries is approximately 1.3 million tons per annum, comprising both Group I and Group II base oils. In addition, Luberef also produces white products such as diesel, naphtha and drilling fluid.
