Saudi Aramco Base Oil Company – Luberef (2223) Q3 2024 earnings summary

Executive summary

• Maintained operational excellence and safety with a TRIR of 0.0, over 37.7 million man-hours without LTI, and mechanical availability of 99.6%.

• Revenue for 9M 2024 was SAR 7,409 million, up 6% year-over-year, but net income and EBITDA declined 38% and 37% respectively due to lower crack margins.

• Advanced strategic projects, including Group III+ and lubeHUB initiatives, and published the inaugural Sustainability Report.

• Navigated volatile markets and regional tensions by focusing on controllable elements, cost optimization, and logistics management.

• Signed conditional agreements for lubeHUB and MoU with Bahri Chemicals to optimize logistics and stimulate local demand.

Financial highlights

• 9M 2024 net income was SAR 764 million, down from SAR 1,241 million year-over-year; Q3 2024 net income was SAR 226 million, down from SAR 340 million in Q3 2023.

• 9M 2024 EBITDA was SAR 987 million, down 37% year-over-year; Q3 2024 EBITDA was SAR 280 million, down from SAR 441 million in Q3 2023.

• 9M 2024 revenue reached SAR 7,409 million, up from SAR 6,959 million in 9M 2023; Q3 2024 revenue was SAR 2,495 million, nearly flat year-over-year.

• Free cash flow for 9M 2024 was SAR 1,051 million, down 39% year-over-year; Q3 2024 FCF was SAR 62 million, down from SAR 105 million in Q3 2023.

• Base oil sales volume for 9M 2024 was 929 KT, up 1% year-over-year; Q3 2024 volume was 322 KT, up from 318 KT in Q3 2023.

Outlook and guidance

• Crack margins have stabilized at a 10-year average, with a normalized YTD average of SAR 1,781 per ton.

• 2024 base oil volumes expected to grow mid-single digits year-over-year, with domestic market accounting for ~30% of total.

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

• SAR 938 million of debt repaid in March 2024; dividends to remain at 60-80% of free cash flow.

• Consultants expect current price ranges to persist for the rest of the year.