Riyadh, Saudi Arabia — Rabigh Refining and Petrochemical Company (Petro Rabigh)’s losses surged 320 percent in 2023 to SAR 4.69 billion ($1.25 billion), from SAR 1.11 billion in 2022.
In a statement to Tadawul, the company said the losses piled up primarily due to the challenging market conditions adversely affecting the margins for both refined and petrochemical products; a significant increase in the financing costs because of rising interest rates and an unplanned shutdown of the Ethane cracker unit starting from March 1, 2023, to March 20, 2023, for maintenance activities.
A one-off provision of SAR365.7 million relating to a claim raised by a third-party against the company also cut the profits.
The company’s accumulated losses as of December 31, 2023, amounted to SAR 6.40 billion representing 38.34 percent of the company’s share capital of SAR 16.71 billion.
The board took several actions to address the company’s accumulated losses, including evaluating the company’s funding position and liquidity to assess its ability to meet due obligations. This also included reviewing and approving the company’s business plan for the years 2024, 2025 and 2026 including cash flows and forecasts.
Petro Rabigh reviewed potential founding shareholders support through payment term adjustments and crude slate changes, which is expected to improve the company’s cash flows position and products margin.
Further, the company reviewed the economics and cash flow projections of two mega projects, Debottlenecking Project (DBN) and Diesel Hydrotreater Project (DHT) and assessed its impact on the company’s profitability and cash flows. This is expected to favorably impact the firm’s profitability in the medium and long-term period.
The transformation program was evaluated, as several value-added initiatives were introduced to improve the company’s profitability.
The transformation program was started in 2021, as the firm implemented 185 initiatives with the objective of reducing the company’s operational cost and increase revenue.
The directors also reviewed 40 new initiatives intended to further reduce the operating losses in 2024, in addition to the recurring value of the 185 initiatives previously implemented.
The petrochemical producer said it 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.