Lucref Q2 profit exceeds estimates

Saudi Aramco Lubricants Company "Luberef" posted record profits in the second quarter of 2026, with a net profit of 734.1 million SAR, representing a 199% increase compared to the previous year. However, it fell short of analysts' expectations, which were estimated at 986.3 million SAR. The primary driver of this increase was the improvement in cracking margins, which rose by 91%, leading to higher earnings from the company’s operations, even though sales volumes grew by only 2%. Despite the high profits, limited growth in sales volume constrained overall profitability, as lubricating oil sales dropped by 5% in the first half of 2026, despite the company's increased profits. This indicates that the earnings were primarily driven by margin and price improvements rather than expanded production. These results represent the highest quarterly profits since the company's listing, accompanied by a significant boost in cash flows, which increased by 346%. The company will postpone expansion-related shutdowns until October 2026 to benefit from higher profit margins, with production expected to increase after completing the expansion in 2027. However, reliance remains on the volatile margin cycle and the impacts of global market prices.

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