S-OIL Reports 1 Trillion Won Loss in Q1

[Asia Economy Reporter Park So-yeon] S-Oil recorded a deficit in the 1 trillion won range in the first quarter due to the spread of the novel coronavirus infection (COVID-19) and the plunge in oil prices.

S-OIL announced on the 27th that its operating loss in the first quarter of this year was tentatively estimated at 1.0073 trillion won, turning to a deficit compared to 270.4 billion won in the same period last year.

Sales decreased by 4.2% compared to the same period last year to 5.1984 trillion won, and decreased by 19.7% compared to the previous year.

An S-OIL official explained, "The deficit occurred due to large-scale inventory-related losses caused by the drop in oil prices and the weakening of refining margins due to the global spread of COVID-19."

By sector, the refining division recorded a deficit of 1.19 trillion won, more than 10 times the deficit compared to the fourth quarter of last year. The company stated that demand, mainly for transportation products, plummeted, keeping refining margins at a low level, and inventory-related losses due to the drop in oil prices overlapped.

The petrochemical division posted an operating profit of 66.5 billion won due to a slight increase in the spread (the price difference between products and raw materials) caused by the drop in raw material prices following the decline in oil prices. The lubricants base oil division also recorded an operating profit of 116.2 billion won due to the spread increase.

S-OIL forecasted that refining margins would gradually recover in the second quarter due to large-scale operating rate adjustments and scheduled maintenance by refiners.

A company official said, "The paraxylene spread is expected to improve somewhat due to the drop in raw material prices and scheduled maintenance of major facilities in the region," and "The polypropylene spread is expected to improve due to increased demand for medical supplies related to COVID-19."

S-OIL plans to conduct scheduled maintenance for certain processes of atmospheric distillation units (CDU), residue fluid catalytic cracking units (RFCC), polypropylene (PP)/propylene oxide (PO) facilities during the second and third quarters for a certain period.

At the earnings announcement conference call on the day, S-OIL stated, "Apart from the scheduled maintenance, there are no plans yet for operating rate adjustments due to margin rate declines."

According to the company, the petrochemical phase 2 project will also proceed as planned, with decisions to be made early next year or in the second half of next year considering the level of financial structure improvement.

However, it said, "The ramp-up of facilities scheduled for expansion this year is expected to proceed slowly," and "There is a possibility that next year's expansion plans may also be partially delayed."

This content was produced with the assistance of AI translation services.