“Petro Rabigh” records losses of 4.69 billion riyals during 2023, an increase of 321%

Rabigh Refining and Petrochemical Company (Petro Rabigh) recorded losses of 4.69 billion riyals during the year ending on December 31, 2023, compared to losses of 1.15 billion riyals in the year 2022, an increase of 321%. This came after today’s announcement of the annual financial results ending on December 31, 2023.

The operating loss amounted to 2.6 billion riyals during the year ending December 31, 2023, compared to a profit of 12 million riyals in the year before last.

The loss per share last year amounted to 2.81 riyals, compared to a loss of 0.79 riyals in the year before last.

The reason for the decrease in sales is mainly due to the decrease in average selling prices and decrease in sales quantities as a result of difficult market conditions and decrease in production due to unscheduled shutdown and optimal utilization of the industrial complex.

The increase in net loss during this year compared to the previous year is mainly due to the following reasons:

• Difficult market conditions that negatively affected profit margins for both refined and petrochemical products.
• The significant increase in financing costs as a result of rising interest rates.
• Unscheduled shutdown of the Ethane Cracking Unit (ECR) from March 1, 2023 to March 20, 2023 to perform necessary maintenance work and enhance the reliability of the plant, and also unscheduled shutdown of the High Olefin Fluid Catalytic Cracker (HOFCC) unit during the month of December to perform necessary repairs and maintenance.
• A one-time provision to meet the claim filed by a third party against the company in the amount of 365.7 million riyals.

The accumulated losses as of December 31, 2023 amounted to 6,406 million riyals, representing 38.34% of the company’s capital, which amounted to 16,710 million Saudi riyals. The main reasons for these accumulated losses were mentioned above in explaining the reason for the increase (decrease) in net profit during the current year compared to the previous year.

The Board of Directors took the following measures to address the company’s accumulated losses:

• The company’s financing and liquidity position was assessed to determine the company’s ability to meet its obligations when they fall due and the company’s business plan for the years 2024, 2025 and 2026 was reviewed and approved, including cash flows and future forecasts.
• Founder support was reviewed through adjustments to payment terms for sales and changes in crude oil type, which are expected to improve the company’s cash flow position and profit margin on the products.
• The economic and cash flow forecasts for two mega projects, the Destruction of Barriers (DBN) project and the Diesel Hydrotreating (DHT) project, were reviewed and its impact on the company’s profitability and cash flows was assessed, which is expected to positively impact the company’s profitability in the medium and long term.
• The transformation program was evaluated and several initiatives were introduced to improve the company’s profitability. The transformation program began in 2021, during which the company implemented 185 initiatives with the aim of reducing the company’s operational costs and increasing revenues. The transformation program is now entering its fourth year, and the Board of Directors has reviewed 40 new initiatives aimed at further reducing operating losses during the year ending in December 2024, in addition to the achieved and recurring value of 185 initiatives that were previously implemented.