Q1 2026 Saudi Aramco Base Oil Company - Luberef SJSC Earnings Call Transcript
Key Points
- Saudi Aramco Base Oil Co - Luberef (SAU:2223) achieved a net income of SAR258 million in Q1 2026, marking a 16% increase year-on-year despite a 12% decline in sales volumes.
- The company maintained a total recordable incident rate of 0 and surpassed 43.9 million man hours without a lost time incident, highlighting their strong safety culture.
- Luberef successfully navigated geopolitical challenges by leveraging contracts of affreightment, which reduced freight costs by approximately 25% compared to the previous year.
- The company is progressing well with strategic initiatives, including the feedstock supply agreement for the Jeddah facility and the Group II slating program, both nearing final stages.
- Luberef's Growth II projects are on track, with major equipment deliveries scheduled and construction activities advancing, aiming for completion in the second half of 2026.
- Base oil crack margins experienced a temporary compression of approximately 14% due to rising feedstock costs, impacting overall margins.
- Free cash flow was compressed during the quarter, driven by higher capital expenditures and working capital buildup.
- The company revised its full-year sales target down to 1.15 million metric tons from 1.25 million metric tons due to geopolitical and market dynamics.
- There was a 12% decline in base oil sales volume, attributed to the time taken to stabilize operations post-turnaround.
- Despite strong byproduct margins, the company faces challenges from evolving geopolitical conditions that could impact future performance.
(spoken in foreign language) Hello, everyone. I'm Saleh Alghamdi, Investor Relations Manager at Luberef. It is my pleasure to welcome you to today's audio webcast where we will be discussing our performance for the first quarter of 2026.
I'm also pleased to be joined today by our President and Chief Executive Officer, Mr. Samer Al-Hokall; and our Chief Financial Officer, Mr. Saud Kamakhi. Our session will begin with a presentation highlighting Luberef's performance for Q1 2026 followed by a Q&A session.
Please note, this webcast is being recorded for future reference. Before we dive into the presentation, I would like to draw your attention to our cautionary statement. During this presentation, we may make forward-looking statements that refer to estimates, plans and expectations. Actual results and outcomes may differ materially due to factors stated on the slide.
With that out of the way, I will now hand over the call to our CEO, Mr. Samer Al-Hokall.
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