Luberef reported a 24% drop in net profit for full-year 2023 as the effects of decreased crack margins more than offset higher base oil sales volumes.
In the fourth quarter, net profit took a steeper decline of 65%.
The company’s net profit fell to 1.5 billion riyals (U.S. $400 million) for the full year, compared to 2 billion riyals in 2022.
The company’s base oil sales volume – excluding Base Oil Alliance and imported volumes – increased 2% to 1.3 million metric tons in 2022, Luberef, formally known as Saudi Aramco Base Oil Co., said in its 2023 Annual Results report.
Sales revenue for the year declined to 9.5 billion riyals, 11% lower than 10.6 billion riyals. “The drop in revenue is mainly driven by a decrease in the prices of base oils and by-products, despite higher base oil sales volumes,” the company said in its earnings statement.
In the fourth quarter, Luberef’s profit was down at 269 million riyals, compared to 763 million riyals, which the company attributed to 37% lower base oil crack margins. “Additionally, the net income of the fourth quarter of 2022 was higher due to the conversion from tax to zakat post-listing,” the company noted in its annual results report.
Fourth-quarter sales revenue was 2.5 billion riyals, a 39% jump from 1.8 billion riyals.
For the quarter ended Dec. 31, Luberef’s base oil sales volume rose by 18% to 333,000 tons, compared to 283,000 tons in the same quarter in 2022.