S-Oil Reports Operating Profit of 515.7 Billion KRW in Q1, Turning Positive from Previous Quarter's Operating Loss

S-Oil overcame its operating loss in the fourth quarter of last year and turned a profit in sales in the first quarter of this year.

S-Oil announced on the 27th that it recorded sales of 9.0776 trillion KRW and an operating profit of 515.7 billion KRW in the first quarter of 2023.

According to the data disclosed by the company on this day, sales decreased by 14.3% from the previous quarter to 9.0776 trillion KRW due to the decline in selling prices caused by the drop in international oil prices.

Operating profit turned positive in the petrochemical sector in addition to solid margins in the refining and lubricants sectors. Although inventory-related losses due to the decline in oil prices amounted to 123.4 billion KRW, the company recorded a quarterly operating profit of 515.7 billion KRW and a net profit of 265.3 billion KRW.

S-OIL 2023 Q1 Performance Overview.

In the refining business sector, Asian regional refining margins remained solid due to increased regional demand following China's reopening, despite a softening diesel market. Gasoline spreads turned strong due to the recovery of mobility demand in China and supply disruptions outside the region, including the U.S. and Europe.

In the petrochemical aromatic sector, despite the operation of large-scale new aromatic facilities in China, the market was supported by the operation of new downstream facilities and the gradual improvement in derivative demand following China's reopening.

In the olefin downstream sector, despite downward pressure from capacity expansions in Asia, the market was supported by regional scheduled maintenance and gradually improving demand from China's reopening.

In the lubricants sector, the lubricant base oil fundamentals recovered strength due to demand rebound from inventory stocking before the seasonal peak following the winter off-season, China's reopening, and the Lunar New Year. Although lubricant base oil spreads slightly declined from the previous quarter, they remained at a higher level compared to the average year due to the drop in raw material prices.

Business Performance by Division for Q1 2023.

S-Oil provided its business segment outlook for the second quarter of this year.

In the refining sector, Asian regional refining margins were recently revised downward but are expected to be supported by increased demand during the summer driving season and scheduled maintenance by global refiners. Gasoline and jet fuel demand is expected to rise due to the first Labor Day holiday after China's lifting of lockdown measures and the arrival of the seasonal peak.

In the petrochemical aromatic sector, PX and BZ markets are expected to be supported by increased downstream demand and gasoline blending demand during the summer driving season, despite concentrated scheduled maintenance of aromatic facilities both domestically and internationally.

In the olefin downstream sector, although the impact of increased supply from new plants in China and Southeast Asia will continue, gradual recovery is expected through demand improvement from China's reopening, Ramadan, and the Labor Day holiday.

The lubricants sector is also expected to remain strong. Lubricant base oil fundamentals are forecasted to strengthen due to seasonal demand increases and scheduled maintenance by major suppliers, with lubricant base oil spreads also expected to be strong under solid fundamentals.

The company also anticipates an upward trend in the business environment. Major institutions have revised upward their 2023 global oil demand growth forecasts due to the resumption of economic activities and increased mobility following China's reopening.

They expect a new leap in profitability through the expansion of the petrochemical business via the Shahin project, which has industry-leading competitiveness. It is known that EPC work and site suspension construction have been carried out as planned since January this year. The Shahin (meaning "hawk" in Arabic) project is the largest foreign investment project ever undertaken as a single project.

S-Oil stated, “We are introducing cutting-edge digital technologies aimed at a comprehensive digital transformation of production plant operation infrastructure, encompassing production management, maintenance management, and safety, and are promoting the enhancement of operational efficiency at the highest level by utilizing these technologies.”

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