S-Oil Posts Record Quarterly Sales of 11 Trillion KRW and Operating Profit of 1.7 Trillion KRW in Q2

[Asia Economy Reporter Oh Hyung-gil] S-Oil achieved its highest quarterly sales and operating profit in the second quarter. This was due to inventory valuation gains from rising international oil prices and an increase in refining margins, a key profitability indicator.

S-Oil announced on the 28th that its consolidated operating profit for the second quarter this year reached 1.722 trillion KRW, a 201.6% increase compared to the same period last year.

Sales increased by 70.5% year-on-year to 11.4424 trillion KRW, and net profit rose by 146.9% to 1.0142 trillion KRW.

S-Oil stated, "Sales increased due to higher selling prices driven by rising international oil prices, expanded refining margin strength, a turnaround to profitability in petrochemicals, and improved lubricants earnings. The normalization of demand following the easing of movement restrictions, geopolitical issues from the Russia-Ukraine war, and supply shortages caused by restructuring of refining facilities sustained the strong international refining margins."

Inventory-related gains from rising oil prices amounted to 357.9 billion KRW in the second quarter (562 billion KRW in the first quarter). S-Oil explained, "This year's net profit will be used as investment funds to secure sustainable growth drivers and respond to future energy transitions." Currently, S-Oil is advancing the large-scale second-phase petrochemical project called the 'Shaheen Project' to expand its petrochemical business sector.

The strong performance in the refining sector was driven by limited supply due to sanctions on Russian oil imports and reduced exports from China, alongside robust demand recovery post-pandemic. In particular, spreads for gasoline, diesel, and jet fuel rose to high levels amid extremely tight supply and low inventories.

In the petrochemical sector, aromatics saw an increase in PX (paraxylene) spreads as demand for aromatic intermediates rose to boost gasoline production, while supply was constrained due to operational disruptions and scheduled maintenance.

In the olefin downstream sector, PP and PO demand recovery was limited by China's lockdown measures. While PP spreads rebounded from lows due to reduced operating rates, PO spreads remained at moderate levels.

The lubricants sector improved due to strong demand supported by seasonal factors and tight supply caused by increased diesel production relative to base oils. Additionally, lubricant base oil spreads widened as product prices lagged behind raw material price increases.

Regarding the outlook for the third quarter, the refining sector expects Asian refining margins to be revised downward; however, due to tight global refining capacity supply-demand conditions, margins are anticipated to remain at levels higher than previous business cycles.

S-Oil stated, "Although refining margins, which surged in the second quarter due to geopolitical factors, have recently been adjusted downward, they are expected to maintain a solid trend in the long term." It added, "Under the global trend of greenhouse gas reduction and energy transition, investment in new refining facilities has been restrained, significantly lowering the industry's perception of long-term threats from new supply increases."

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