S-Oil Reports Q2 Operating Profit of 36.4 Billion KRW, Down 97% YoY

"International Oil Prices Fall Due to Decline in Refining Margins"

S-Oil announced that its sales for the second quarter of this year reached 7.8196 trillion KRW, with an operating profit of 36.4 billion KRW. Compared to last year, sales decreased by 31.7%, and operating profit dropped by 97.9%.

Sales amounted to 7.8196 trillion KRW, down 13.9% from last year due to reduced sales volume from scheduled maintenance and a decline in selling prices caused by falling international oil prices. Amid a significant decrease in refining margins in the Asia region, the refining sector turned to a loss due to large-scale scheduled maintenance (-255.6 billion KRW) and inventory-related losses from falling oil prices (-67.5 billion KRW). However, thanks to expanded profits in the petrochemical and lubricants sectors, the company recorded an operating profit of 36.4 billion KRW.

By business segment, the refining sector saw a downward adjustment in regional refining margins due to a contraction in diesel and naphtha spreads caused by sluggish recovery in demand for industrial refined products. Dubai crude oil prices slightly declined amid concerns over a global economic slowdown and the ongoing production cut policy of 'OPEC+'. The petrochemical sector improved due to reduced supply from concentrated scheduled maintenance of regional production facilities in the PX and benzene markets, as well as increased demand for aromatics blended into gasoline during the peak gasoline season.

S-Oil stated, "In the third quarter, large-scale scheduled maintenance will be completed in July, normalizing plant operating rates. As the one-time effect of scheduled maintenance disappears and refining margins recover along with increased demand, rapid profit growth is expected after the third quarter."

S-Oil plans to protect shareholder value despite large-scale investments. The company said, "Despite significant investments for the Shahin project, we plan to maintain a dividend payout ratio of about 20% or more of net income for the 2023-2024 fiscal years to protect shareholder value." It added, "Considering that the Shahin project is in its early stages requiring substantial investment, this reflects a conservative approach. After securing investment funds to a certain level, the dividend payout ratio may be increased."

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