Aramco refining unit Luberef’s profit rises on lower expenses

Company's net profit in the in second quarter reached $121 million

Saudi Aramco's refining unit Luberef raised $1.32 billion in an initial public offering last year. Reuters

Saudi Aramco Base Oil Company, or Luberef, posted a 4 per cent rise in second-quarter net profit on the back of lower expenses.

The company’s net profit after zakat and tax in the three months to the end of June rose to 454.85 million Saudi riyals ($121.29 million), the company said on Sunday in a statement to Saudi Arabia's Tadawul stock exchange, where its shares are traded.

Revenue for the quarter, however, dropped nearly 22 per cent year-on-year to 2.6 billion riyals.

The increase in Luberef's net income was “driven by a decrease in zakat and income tax expenses due to Luberef being subjected to zakat only after its listing”, the company said.

Established in 1976, Luberef operates two production plants on the west coast of the kingdom – in Yanbu and Jeddah – with a combined annual production capacity of 1.3 million tonnes of base oils, according to its website.

The Aramco unit makes base oils used in lubricants for motor vehicles, ships and industrial machinery.

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 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.

The company's first-half profit jumped nearly 22 per cent to 900.5 million riyals as a result of the decrease in zakat and income tax expenses as well as an "increase in base oil crack margins despite lower base oil volumes sold", it said.

Revenue slid early 28 cent to 4.4 billion riyals in the January-June period.

The company's board of directors approved the distribution of cash dividends to shareholders for the first half of 2023 amounting to 841.28 million riyals, Luberef said.