Operating Profit Turns Positive at 260.8 Billion KRW... S-Oil Announces Q4 Results for Last Year

Operating Profit Turns Positive on Improved Refining Margins
Stable Growth in Oil Demand Expected This Year

S-Oil posted an operating profit of 260.8 billion KRW in the fourth quarter of last year, turning profitable thanks to improvements in refining margins.

On the 24th, S-Oil announced that its sales revenue for the fourth quarter of 2024 reached 8.9171 trillion KRW. While sales remained at a level similar to the previous quarter, operating profit was analyzed to have turned positive based on improved refining margins and favorable inventory-related effects.

Last year's annual sales revenue was 36.637 trillion KRW, and the annual operating profit was 460.6 billion KRW. Sales increased slightly due to higher sales volume. However, operating profit declined compared to 2023 due to weaker refining margins and petrochemical and lubricant base oil spreads.

Operating profit by business segment in 2024 recorded a loss of 245.4 billion KRW in the refining segment, a profit of 134.8 billion KRW in the petrochemical segment, and a profit of 571.2 billion KRW in the lubricant base oil segment.

S-Oil Refinery Plant.

Looking at the fourth quarter 2024 performance by business segment, the refining segment saw Asian refining margins rise compared to the previous quarter due to reduced supply from regional refinery maintenance and seasonal increases in heating oil demand. Despite downward pressure from the stronger dollar value of Dubai crude oil prices, expectations for economic stimulus in China offset this decline.

In the petrochemical segment, the PX and benzene markets saw spreads decline due to reduced demand for aromatic raw materials used in gasoline blending caused by weaker winter gasoline demand and increased supply from new Chinese facilities coming online.

In the olefin downstream sector, the PP market slightly improved due to seasonal demand from Black Friday and Christmas, but the PO market weakened as supply increased following maintenance and restart of Chinese facilities while downstream demand remained sluggish.

The lubricant base oil segment's spread slightly declined due to seasonal demand slowdown in the off-season.

S-Oil provided a forecast for the first quarter of this year. In the refining segment, Asian refining margins are expected to remain firm due to anticipated decreases in Chinese export volumes and seasonal demand increases.

Supply is expected to be limited due to larger scheduled maintenance of refining facilities in China during January and February compared to the same period last year, alongside increased transportation fuel demand during the Lunar New Year holiday.

In Europe, low natural gas inventories combined with rising natural gas prices are expected to strengthen diesel demand as a substitute fuel.

In the petrochemical segment, the PX and benzene markets are expected to have sufficient supply, but demand increases from new downstream facilities coming online may partially offset this. Market conditions could rebound depending on gasoline blending demand.

In the olefin downstream sector, downward pressure is expected on the PP and PO markets due to ongoing new and expanded Chinese facilities, but demand stimulation effects from China's economic stimulus measures are anticipated. The lubricant base oil spread is expected to improve with the approaching spring lubricant replacement season, along with additional demand improvements supported by the Chinese Lunar New Year holiday and economic stimulus measures.

S-Oil expects a promising operating environment for the new year. Despite expanded domestic and international uncertainties, it anticipates steady economic growth in developing countries within Asia and increased oil demand driven by strengthened economic stimulus measures in China.

In the mid to long term, oil demand is expected to show stable growth, while net capacity expansions are expected to be limited, leading to improved supply-demand conditions over the long term.

Through the GTG project, S-Oil plans to produce 121 MW of electricity and 160 tons per hour of high-pressure steam to respond to increased power consumption and implement cost reduction measures.

The GTG (Gas Turbine Generator), a self-heat combined power generation facility that produces electricity by inputting natural gas, is scheduled for completion by December 2026. This will address rising electricity costs and increased power consumption expected after the completion of the Shahin project, reduce operating costs, and is expected to reduce carbon emissions by 160,000 tons annually.

S-Oil also updated on the progress of the Shahin project. The project, undertaken to prepare for the energy transition era and enhance long-term corporate value, is progressing smoothly as planned.

As of the end of December last year, the progress rate was 51.8%, 1.4 percentage points ahead of schedule. The design progress rate was 95.5%, with construction drawings being issued. The procurement progress rate was 61.0%, with most equipment and materials ordered and being manufactured as planned, and continuous monitoring is underway to ensure timely delivery.

Construction progress stood at 37.4%, with installation of a total of 10 steam cracker cracking heaters, steam cracker pipe rack modules, and above-ground piping underway. Construction of the control room and automated warehouse is also in progress.

S-Oil stated, "Through the Shahin project, we are securing excellent raw materials, facilities, and operational competitiveness by integrating refining and chemical operations," adding, "With the TC2C new technology, we will achieve higher chemical product yields and lead the industry in energy efficiency, securing top-level cost competitiveness in Northeast Asia."

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