Saudi Aramco Base Oil Company – Luberef (2223) Q2 2024 earnings summary

Executive summary

• Operational excellence maintained with nearly 37 million man-hours without LTI and mechanical availability up to 99.8%.

• Net income for H1 2024 declined 40% year-over-year to SAR 538 million, mainly due to lower crack margins, despite higher sales volumes and improved efficiency.

• Revenue for H1 2024 increased to SAR 4,914 million from SAR 4,410 million in H1 2023, driven by higher base oil sales volume.

• Recognized for safety and maintenance excellence with Saudi Aramco's President's Affiliate Award.

• Strategic partnerships expanded, including Valvoline blending plant MoU and research on uODS technology.

Financial highlights

• H1 2024 sales volume reached 607,000 metric tons, up from 600,000 in H1 2023.

• EBITDA for H1 2024 was SAR 707 million, down 37% year-over-year.

• Free cash flow for H1 2024 was SAR 879 million, up 20% from H1 2023, supported by working capital changes.

• Operating cash flow at SAR 959 million for H1 2024.

• Interim dividend for H1 2024 at SAR 3.6 per share, down from SAR 5 in H2 2023.

Outlook and guidance

• Focus on cost control, maximizing asset utilization, and growth projects for the remainder of 2024.

• Base oil volumes expected to grow mid-single digits year-over-year, with domestic market at ~30%.

• Maintenance capex projected at SAR 80–100 million; Yanbu Growth II project capex at SAR 150–200 million.

• Dividend policy remains at 60%-80% of free cash flow, with interim dividend for H1 2024.

• HVGO project pre-commissioning underway, expected online mid-August 2024.