Petro Rabigh widens 2023 losses to SAR 4.69B; Q4 loss at SAR 1.38B

Rabigh Refining and Petrochemical Co.'s (Petro Rabigh) net losses widened to SAR 4.69 billion in 2023 from SAR 1.11 billion a year earlier.

Losses deepened due to lower average selling prices and sales volumes on challenging market conditions and a decrease in production on unplanned shutdown and complex optimization.

The market conditions also adversely affected the margins of both refined and petrochemical products. This is in addition to the significant increase in the financing costs on higher interest rates.

Petro Rabigh also attributed the losses to the unplanned shutdown of the ethane cracker unit, from March 1-20, 2023, for necessary maintenance activities to enhance the plant’s reliability. It also cited the unplanned shut down of the high olefins fluid catalytic cracker (HOFCC) unit for necessary repairs and maintenance in December 2023.

Further, the petrochemical producer reported a one-off provision of SAR 365.7 million for a claim raised by a third party against the company.

Petro Rabigh narrowed losses to SAR 1.38 billion in Q4 2023 from SAR 1.81 billion in Q4 2022.

On a sequential basis, the company cut its losses from SAR 1.14 billion in Q3 2023.

Total shareholders’ equity, no minority interest, reached SAR 10.55 billion as of Dec. 31, 2023, down from SAR 15.25 billion a year earlier.

Accumulated losses amounted to SAR 6.40 billion at the end of 2023, representing 38.34% of the company's capital of SAR 16.71 billion.

The board took several actions to address the accumulated losses, including evaluating the funding position and liquidity to assess the company’s ability to meet due obligations. This also included reviewing and approving the business plan for 2024, 2025 and 2026, including cash flows and forecasts.

Petro Rabigh reviewed potential founding shareholders’ support through payment term adjustments and crude slate changes in order to improve cash flows and products margin.

Further, the company reviewed the economics and cash flow projections of two mega projects, Debottlenecking Project and Diesel Hydrotreater Project, and assessed their impact on profitability and cash flows. This is expected to favorably affect profitability in the medium and long terms.

The transformation program, launched in 2021, was evaluated and several value-added initiatives introduced to improve profitability. The board also reviewed 40 new initiatives intended to mitigate the operating losses in 2024, in addition to the recurring value of the 185 initiatives implemented under the transformation program.

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