Aramco refining unit Luberef profit surges 32% on higher sales volumes

Net profit after zakat and tax rose 32% year-on-year to $527 million in 2022

Saudi Aramco refining unit Luberef began trading on the Arab world's largest stock market, the Tadawul, in December after it raised $1.32 billion in an IPO. AFP

Saudi Aramco Base Oil Company, or Luberef, posted a 32 per cent rise in full-year net profit last year, driven by an increase in sales volumes and improved base oil crack margins.

Net Profit after zakat and tax rose to 1.97 billion Saudi riyals ($527 million), up from 1.5 billion riyals in 2021, Luberef said on Sunday in a statement to Saudi Arabia's Tadawul stock exchange.

Revenue jumped 20 per cent year-on-year to 10.6 billion riyals due to higher crack margins in base oils and by-products, the refining unit of the state-owned oil producer said.

“The company recorded its highest net income in its history in 2022,” Luberef said.

Base oil crack margins increased 10 per cent on an annual basis to 2.5 billion riyals in 2022, Luberef said. Refining margins are also known as cracks.

The annual results come after Luberef began trading on the Arab world's largest stock market in December after it raised $1.32 billion in its initial public offering. The refining unit of oil company Saudi Aramco sold more than 50 million shares, or about 29.7 per cent of the company's issued share capital, with the IPO drawing strong demand from investors in the kingdom and internationally.

Luberef's IPO came amid a bumper year for company listings in the Gulf and Mena regions, which is bucking the global slowdown in global market. Saudi Arabia and the UAE make up the majority of new listings.

The Arab world's two biggest economies have expanded at their fastest pace in over a decade on the back of higher oil prices, an accelerated rebound from the pandemic-induced slowdown, with strong demand registered in the property, travel and tourism sectors.

Luberef was Saudi Arabia's third-largest IPO in 2022 after Americana, the largest quick-service restaurant operator in the Mena region, raised $1.8 billion from its IPO listing and following Nahdi Medical, the kingdom's biggest pharmacy chain, which raised $1.36 billion.

Luberef's EBITDA of 2.5 billion riyals in 2022, grew from 2.1 billion in 2021, an increase of 20 per cent year-on-year.

Its gearing ratio dropped to 3 per cent by the end of 2022 from 17 per cent in 2021, represent a “strong financial position”, it said.

The company's free cash flow increased 14 per cent on an annual basis in 2022 to reach 1.96 billion riyals.