Luberef’s profit soars 21.68% to $240m in H1

RIYADH: Driven by higher base oil crack margins, the net profit of Saudi Aramco Base Oil Co., also known as Luberef,  surged 21.68 percent to SR900.52 million ($240 million) in the first half of 2023 compared with SR740.10 million in the same period last year. 

In a statement to Tadawul, the company revealed that the rise in profit was also due to the lower zakat and income tax expenses, as the firm is subject to pay only zakat. 

“Net income increased in the current period (first half) compared to the previous period due to a decrease in zakat and income tax expenses due to Luberef being subjected to zakat only after its listing, in addition to an increase in base oil crack margins despite lower base oil volumes sold,” said Luberef in the statement. 

The filing further noted that Luberef’s net profit for the second quarter went up 3.97 percent to SR454.85 million, compared to SR437.47 million reported in the year-ago period. 

In a separate statement, Luberef revealed that its board of directors approved implementing a performance-linked dividend policy that targets the distribution of 60 percent to 80 percent of the company’s annual free cash flow. 

According to the statement, the company is planning to pay these performance-linked dividends on a semiannual basis. 

Luberef was listed on Tadawul All Share Index in December 2022, as the company sold shares owned by private equity company Jadwa Investment, which held 30 percent of this Saudi Arabian Oil Co. subsidiary after acquiring the stake from Exxon Mobil Corp. in 2007. 

Saudi Aramco currently owns the remaining 70 percent of Luberef, as the energy giant did not sell any of its shares during the offering. 

After the listing, Mohammed Y. Al-Qahtani, senior vice president of downstream, Saudi Aramco, told Arab News that Luberef’s listing on the Saudi Stock Exchange was an important milestone. 

“As an integral part of Saudi Arabia’s supply chain and a driving force in the Kingdom’s industrialization ambitions, Luberef’s listing will provide an important strategic dimension to propel the company’s growth strategy and help realize its vision to be the leading supplier of premium base oils and specialty products,” said Al-Qahtani. 

He added that Luberef’s listing will help fuel the company’s “growth trajectory and unlock new opportunities for all stakeholders.”