S-Oil's Q3 Operating Profit Falls 7%... Performance Streak Ends (Update)

3Q Revenue 11.1226 Trillion KRW · Operating Profit 511.7 Billion KRW
Net Income Turns Negative Due to Refining Margin Decline

[Asia Economy Reporter Oh Hyung-gil] S-Oil's streak of strong performance has come to a halt due to concerns over a global economic downturn and falling crude oil prices.

S-Oil announced on the 27th that its operating profit for the third quarter was 511.6 billion KRW, down 6.9% compared to the same period last year. This represents a decrease of over 70% compared to the previous quarter, which recorded the highest performance ever.

Sales rose 56.3% from the same period last year to 11.1226 trillion KRW but slightly decreased by 2.8% compared to the previous quarter. Net profit turned to a loss.

Cumulative sales and operating profit up to the third quarter were 31.852 trillion KRW and 3.5656 trillion KRW, respectively, marking increases of 66.1% and 103.8% compared to the same period last year.

S-Oil explained that despite downward revisions in international oil prices and refining margins, contributions from the lubricants and petrochemical sectors increased.

By business segment, the refining division's operating profit was limited to 78.8 billion KRW. Seasonal demand during the summer was weaker than expected, and concerns over additional export quotas for petroleum products from China led to a decline in regional refining margins, impacting performance.

Additionally, the drop in crude oil prices due to global recession fears resulted in a one-time loss related to oil prices being reflected in the third quarter operating profit.

The petrochemical division achieved an operating profit of 56.1 billion KRW, maintaining a solid level despite the continued weakness in naphtha prices, a raw material, and the impact of regular maintenance and production cuts at regional facilities.

The lubricants division recorded an operating profit of 376.7 billion KRW. Despite a demand slowdown after the summer peak season, regular maintenance of production facilities helped maintain a solid lubricants base. The lubricants spread also expanded significantly due to the drop in raw material prices caused by falling oil prices.

The company expects refining margins in the Asian region to improve in the fourth quarter due to increased seasonal demand in winter. It also anticipates that the strong cycle in the refining industry will continue as refining capacity shortages persist over the long term.

An S-Oil official stated, "The effect of increased export volumes from China will be partially offset by reduced production of refined products in Russia," adding, "Diesel and kerosene spreads show significantly low global inventory levels and are expected to remain high due to increased demand for heating oil in winter."

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