This article first appeared on GuruFocus .
-
Revenue:SAR 8.1 billion for 2025.
-
Net Income:SAR 855 million, a 12% decline from SAR 972 million in 2024.
-
Base Oil Sales Volume:Declined by 15% compared to 2024.
-
Base Oil Crack Margins:SAR 1,911 per metric ton, up from SAR 1,700 per metric ton in 2024.
-
Free Cash Flow:Moderated due to elevated investments.
-
Capital Expenditure:Increased from SAR 53 million in 2024 to SAR 147 million in 2025.
-
Cash Conversion:93% for 2025.
-
Net Cash Position:SAR 1,373 million with a gearing ratio of 10%.
-
Operating Expenses:Reduced by SAR 33 million.
-
Cash Balance:Ended the year with SAR 1,373 million, an increase of SAR 186 million from the beginning of the year.
-
Production Target for 2026:1.25 million metric tons for base oil.
-
Growth CapEx for 2026:Expected between SAR 300 and SAR 350 million.
-
Warning! GuruFocus has detected 3 Warning Signs with BOM:541967.
-
Is SAU:2223 fairly valued? Test your thesis with our free DCF calculator.
Release Date: February 09, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Luberef successfully completed the largest turnaround in its history, enhancing equipment inspections across 900 assets.
-
The company achieved a total recordable incident rate of zero for the sixth consecutive year, surpassing 43 million man-hours without a lost time injury.
-
Luberef received ISO certification for its Occupational Health and Safety Management System and a Silver Award for Corporate Social Responsibility.
-
The company secured feedstock allocation for its Jeddah Facility, reinforcing its position in the Group One base oil market.
-
Luberef's transformation initiatives delivered over SAR 100 million in value, enhancing performance across production, logistics, and cost optimization.
Negative Points
-
Base oil sales volumes declined by 15% compared to 2024 due to planned turnaround activities.
-
Net income decreased by 12% from SAR 972 million in 2024 to SAR 855 million in 2025.
-
Free cash flow was moderated due to elevated investments and higher capital spending.
-
The company faced challenges in the procurement of major equipment, impacting project timelines.
-
Byproduct margins were negative, with a crack margin of SAR 51 per metric ton in Q4 2025.
Q & A Highlights
Q: How should we think about the crack margin in 2026 given the expected increase in global base oil products and potential stability in feedstock prices? Also, what is the remaining CapEx related to the Yanbu facility? A: The outlook for 2026 suggests high demand in the first half, with base oil prices peaking in the summer. While there are concerns about oversupply, demand is also projected to increase. We expect some changes in the crack margin but not significant ones. Regarding CapEx, we have spent SAR280 million on the project, with SAR470 million remaining for 2026 and 2027.
Q: Can you provide an idea of your recurring clean volumes capacity and the impact of the new ULSD contract with Aramco on revenues or net profit? A: Our nameplate capacity is SAR1.45 million metric tons annually, with actual production around SAR1.35 million metric tons. The ULSD contract with Aramco is linked to a better pricing index, expected to have a positive impact on revenues due to better pricing compared to other diesel indices.
Q: What are the drivers behind the lower feedstock prices and the strong margins achieved despite lower volumes? A: Lower feedstock prices are linked to crude oil prices, which have decreased. The strong margins are also due to company actions like freight and OpEx reduction and selling in high netback markets. The scheduled turnaround impacted production, but strong crack margins mitigated the effect on EBITDA.
Q: How did Luberef sustain above-guidance sales in Q4 2025, and what is the expected sustaining CapEx for 2026? A: Inventory levels remained stable, with positive working capital movements contributing to sales. Sustaining CapEx is expected to be between SAR100 to SAR140 million annually.
Q: Can you provide clarity on the Yanbu growth project timeline and when the plant will be fully operational? A: The Yanbu growth project is expected to start ramping up in the second half of 2026. The nameplate capacity is 65,000 metric tons, and we aim to produce Group Three oils by then. The exact timeline will be clearer in the coming months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
