S-OIL Q1 Operating Profit 629.2 Billion KRW... Successful Turnaround to Profit Due to Inventory Valuation

Record Highest Quarterly Operating Profit in 5 Years
Performance Improvement Due to Inventory Revaluation Gains from Rising International Oil Prices

[Asia Economy Reporter Hwang Yoon-joo] S-OIL has succeeded in turning a profit in the first quarter of this year due to inventory valuation gains from the rise in international oil prices. In particular, the operating profit in the first quarter of this year recorded the highest level among quarterly operating profits in the past five years.

S-OIL announced on the 27th that its consolidated operating profit for the first quarter of this year was 629.215 billion KRW, turning profitable compared to the same period last year. During the same period, sales increased by 2.8% to 5.3447 trillion KRW, and net profit also turned positive at 344.7 billion KRW.

Sales increased by 24.9% compared to the previous quarter despite a slight decrease in actual sales volume, as product selling prices rose by 30.6% from the previous quarter. Operating profit rose significantly due to margin improvements in major products and inventory valuation gains. An S-OIL official explained the background of the turnaround, stating, "By maximizing the operating rate of RUC/ODC facilities, we were able to maximize the effect of strong prices for polymer (olefin) products and lubricants."

Specifically, the refining sector still showed weak refining margins due to the impact of COVID-19, but with the spread of vaccinations, product demand gradually recovered, and the spreads for key products such as gasoline and diesel showed an upward trend.

The petrochemical sector maintained strong spreads for polymer (olefin) products. In particular, the PO spread reached a very high level due to strong demand for polyols used in automotive and home appliance materials and production disruptions in the US and Europe. The PP spread also remained strong due to steady demand for packaging, hygiene, and medical materials and production disruptions.

Additionally, the paraxylene spread improved compared to the previous quarter due to the recovery of regional polyester demand and reduced supply caused by regular maintenance and operational disruptions at PX production facilities. The benzene spread also rose due to operational disruptions caused by the US cold wave and strong downstream demand.

The lubricant base oil sector maintained high operating profit margins as supply was limited due to low operating rates and regular maintenance at global refineries, while demand recovered, causing spreads to rise significantly.

An S-OIL official predicted, "Refining performance in the second quarter is expected to improve as refining margins rise due to economic recovery from expanded vaccination and increased mobility demand during the driving season. The petrochemical sector is expected to maintain its current strength with steady demand for PP and PO spreads."

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