S-Oil Turns Profitable in Q1 with 1.2 Trillion Won Operating Profit: "Inventory Gains from Rising Oil Prices"

"More Than Half of Q1 Operating Profit Attributable to Inventory Gains"
Shaheen Project 96.9% Complete... Scheduled for First-Half Completion

S-Oil achieved a turnaround in the first quarter of this year, recording an operating profit of 1.2311 trillion won. Despite scheduled maintenance and the implementation of the petroleum maximum price system, the company benefited significantly from inventory gains resulting from rising oil prices.

S-Oil CI. S-Oil

On May 11, S-Oil announced in a regulatory filing that its consolidated operating profit for the first quarter of this year reached 1.2311 trillion won, marking a transition to profitability compared to an operating loss of 21.5 billion won in the same period last year, according to provisional figures.

Revenue stood at 8.9427 trillion won, down 0.5% from the same period last year. Net income also returned to the black, reaching 721 billion won.

An S-Oil representative explained, "More than half of the first quarter's operating profit was attributable to inventory-related effects from rising oil prices," adding, "Although some of the favorable refining margin was offset by scheduled maintenance and the implementation of the petroleum maximum price system, the lagging effect led to improved refining segment profits compared to the previous quarter."

The lagging effect refers to the time-lag impact between the purchase of crude oil and the subsequent production and sale of products. If the price of crude oil rises between the time of purchase and its arrival in Korea, margins increase; if crude prices fall, margins decrease.

By segment, the refining business posted sales of 7.1013 trillion won and operating profit of 1.039 trillion won. Reduced refinery operations in the region due to crude supply disruptions, and lower supply resulting from export restrictions in certain countries, led to higher refining margins.

The petrochemical segment recorded sales of 1.1044 trillion won and operating profit of 25.5 billion won.

The lubricants segment saw sales of 737 billion won and operating profit of 166.6 billion won, with operating profit declining from the previous quarter as the sharp rise in raw material prices was not fully reflected in product prices.

Looking ahead to the second quarter, S-Oil expects that despite concerns over demand slowdown due to high oil prices, the impact of supply disruptions will outweigh these concerns, supporting favorable market conditions.

For the petrochemical segment, the company anticipates increased uncertainty due to volatility in raw material supply and prices. In the lubricants segment, ongoing supply disruptions are expected to restore spreads.

Meanwhile, S-Oil stated that, although the market remains tight due to the war in the Middle East, the company has maintained stable crude supply through long-term purchase agreements with its parent company, Aramco.

Monthly crude oil imports declined slightly due to scheduled maintenance in March and April, but are expected to return to normal levels in May and June.

The company also announced that the Shaheen Project is progressing as planned, targeting mechanical completion by the end of June this year. As of the end of April, the Shaheen Project had achieved a progress rate of 96.9%, and mechanical completion by the end of June remains on track.

S-Oil has completed the installation of major facilities and plans to finish commissioning and preparations for commercial operation by the end of this year.

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