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

Executive summary

• Q3 2024 and 9M 2024 saw declines in net income and cash flow due to lower crack margins and higher feedstock costs, despite operational excellence and safety performance.

• Advanced strategic initiatives, including progress on the GIII/III+ project, lubeHUB facility agreements, and a MoU with Bahri Chemicals for logistics collaboration.

• Published the inaugural Sustainability Report, marking a milestone in ESG efforts.

Financial highlights

• Q3 2024 revenue was SAR 2,495 million, down from SAR 2,549 million in Q3 2023; 9M 2024 revenue reached SAR 7,409 million, up from SAR 6,959 million in 9M 2023.

• Q3 2024 net income was SAR 226 million, down from SAR 340 million in Q3 2023; 9M 2024 net income was SAR 764 million, down 38% year-over-year.

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

• Q3 2024 free cash flow was SAR 62 million, compared to SAR 105 million in Q3 2023; 9M 2024 free cash flow was SAR 1,051 million, down 39% year-over-year.

• Earnings per share for 9M 2024 was SAR 4.54, down from SAR 7.38 in 9M 2023; Q3 2024 EPS was SAR 1.34, down from SAR 2.02 in Q3 2023.

Outlook and guidance

• 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.

• Annual depreciation charge to be reduced by SAR 44 million due to revised asset lives.

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

• Strategic initiatives and cost optimization efforts are expected to drive future value and strengthen market position.