[Click eStock] "GS Q1 Earnings Fall Significantly Short of Market Expectations"

[Asia Economy Reporter Oh Ju-yeon] KB Securities stated on the 12th that GS's operating profit in the first quarter of this year significantly underperformed market consensus, and they expect limited performance improvement through the second quarter.

GS's first-quarter sales amounted to KRW 4.1961 trillion, down 5.0% year-on-year, and operating profit was KRW 9.5 billion, a decrease of 98.2%. KB Securities analyzed that this poor operating profit figure was far below their estimate of KRW 197.1 billion and the market consensus of KRW 143.5 billion, attributing it to "GS Caltex's operating loss turnaround due to expanded inventory valuation losses, and profit declines in private power generation companies caused by SMP price drops and reduced electricity sales volume."

GS Caltex recorded an operating loss of KRW 1.0318 trillion in the first quarter, turning to a deficit compared to the same period last year. As a result, all domestic refining companies including SK Innovation and S-Oil posted negative operating profits. They all recorded large-scale losses due to inventory valuation losses caused by the sharp drop in oil prices and a decline in complex refining margins.

Researcher Baek Young-chan explained, "GS Caltex's inventory-related loss in the first quarter was around KRW 950 billion, which was higher than expected," adding, "This was due to the Dubai crude oil price falling at the end of March more than initially estimated (estimated USD 27.0 vs. actual USD 23.3) and the first-quarter complex refining margin being lower than expected (estimated USD 2.6 vs. actual USD 1.4)."

They also expect limited performance improvement in the second quarter.

Researcher Baek said, "GS Caltex's average complex refining margin in April is estimated to be negative USD 2.6 per barrel," and added, "Although Dubai crude oil prices have been rising since the end of April, they are still forming below USD 30, and above all, due to ongoing movement restrictions, it is difficult for jet oil and gasoline prices to rebound."

He forecasted, "The performance of private power generation subsidiaries (GS EPS/GS E&R) in the second quarter is expected to be similar to the first quarter," and judged that "SMP prices are expected to weaken due to the decline in international oil prices."

However, in the case of GS E&R, some profit increases may be possible due to the rise in the power correction factor.

GS Retail is expected to see further performance improvement in the second quarter. Researcher Baek said, "The first-quarter operating profit increased by 315% year-on-year to KRW 88.8 billion, and even excluding one-time gains of KRW 45 billion, it is expected to exceed market expectations."

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