This article first appeared on GuruFocus .
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Base Oil Crack Margins:SAR1,884 per metric ton, a 9% increase compared to the same period in 2024.
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Net Income:Increased by 14% quarter on quarter in Q3 2025; 2% decrease for the first nine months compared to 2024.
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Free Cash Flow:SAR604 million, a decline of around 43% compared to the same period last year.
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EBITDA:SAR968 million.
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Cash Balance:SAR1.2 billion at the end of the first nine months of 2025.
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Capital Expenditures (CapEx):SAR138 million as of September 2025; revised CapEx for Growth II project to SAR200 million to SAR250 million for 2025.
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Operational Cash Generation:SAR885 million over the first nine months of 2025.
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Total Cash Outflow:SAR102 million, mainly for loan repayments and financing costs.
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Cash Balance Change:Decline of SAR17 million from the beginning of the year, ending at SAR1,170 million.
Release Date: November 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Achieved 41.1 million safe man hours without a lost time injury and maintained a zero total recordable incident rate, highlighting strong safety and operational excellence.
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Expanded customer base through a new ultra-low sulfur diesel sales agreement with Saudi Aramco, enhancing byproduct crack margins and managing market volatility.
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Strengthened partnership with Bahri chemicals and shipping company, optimizing logistics and reducing freight costs significantly.
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Launched the Group III base oil slating program, aiming to diversify the product portfolio and increase market presence.
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Reported a 14% quarter-on-quarter increase in net income for Q3 2025, supported by higher crack margins despite a decline in base oil sales.
Negative Points
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Free cash flow declined by around 43% compared to the same period last year, driven by working capital changes and increased growth CapEx.
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Procurement delays affected the Growth II expansion project, with completion reaching only 60% and pushing expected completion to early 2026.
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Net income for the first nine months of 2025 recorded a 2% decrease compared to the corresponding period of 2024 due to lower byproduct crack margins and decreased base oil sales volume.
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Cash conversion rate softened during the period, although financial resilience remains robust.
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Ongoing procurement delays led to a revision in CapEx spending for Growth II, reducing the expected spend for 2025 from SAR250 million to SAR200 million.
Q & A Highlights
Q: Can you provide guidance on the potential impact of the new diesel supply and the new freight agreement with Bahri? A: The new agreement with Aramco for ultra-low sulfur diesel is a 20-year contract supplying around 6,500 barrels per day, which should yield a premium over previous sales. The Bahri agreement will significantly reduce freight operation costs, positively impacting our operating expenses. Further guidance will be provided in Q4. (Samer Al-Hokail, CEO)
Q: With the Growth II project, will additional diesel production be included in the new agreement? A: The current agreement covers up to 6,500 barrels per day. Additional diesel production from the Growth II project will have different outlets, and guidance on this will be provided later. (Saud Kamakhi, CFO)
Q: Is there any update on the UCO supply contract related to the Growth II project? A: The UCO supply agreement should be finalized soon, likely by Q1 2026. We do not anticipate any issues with this agreement. (Samer Al-Hokail, CEO)
Q: What drove the strong expansion in base oil crack margins during Q3, and how sustainable are these levels? A: The expansion was driven by stable base oil prices and pressure on crude prices due to OPEC+ decisions. We expect base oil prices to remain stable, with high sulfur fuel oil encountering more pressure, supporting healthy crack margins. (Saleh Alghamdi, Investor Relations)
Q: Given the strong free cash flow in Q3, is there scope for higher dividends or special payouts this year? A: Our dividend policy remains linked to free cash flow, with a payout of 60% to 80%. We generated SAR600 million in free cash flow in the first nine months, and this trend is expected to continue. (Saud Kamakhi, CFO)
Q: Will the Growth II project require another shutdown during commissioning? A: We aim to avoid a shutdown and instead slow down operations to integrate Growth II components. Further guidance will be provided by year-end. (Samer Al-Hokail, CEO)
Q: What is the status of the Jeddah facility's operational agreement renewal? A: Discussions are ongoing, and we expect to provide clarity by the end of Q4. (Samer Al-Hokail, CEO)
Q: How will the working capital situation evolve in Q4? A: Working capital will be impacted by inventory reductions and accounts receivable collections. The turnaround will also affect working capital movements. (Saud Kamakhi, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
